Question

Consultex, Inc., was founded in 2015 as a small financial consulting business. The company had done reasonably well in 2015–2017 but started noticing its cash dwindle early in 2018. In January 2018, Consultex had paid $15,000 to purchase land and repaid $3,000 principal on an existing promissory note. In March, the company paid $1,800 cash for dividends and $1,000 to repurchase and eliminate Consultex stock that had previously been issued for $1,000. To improve its cash position, Consultex borrowed $4,800 by signing a new promissory note in May and also issued stock to a new private investor for $11,800 cash. Year-end comparative balance sheets and income statements are presented below.

CONSULTEX, INC.
Balance Sheet
October 31
	2018			2017
Assets
Cash	$	10,330		$	13,600
Accounts Receivable		13,600			11,800
Prepaid Rent		1,900			2,800
Land		25,000			10,000
Total Assets	$	50,830		$	38,200
Liabilities and Stockholders’ Equity
Salaries and Wages Payable	$	1,900		$	2,800
Income Taxes Payable		1,000			1,000
Notes Payable (long-term)		13,600			11,800
Common Stock		19,600			8,800
Retained Earnings		14,730			13,800
Total Liabilities and Stockholders’ Equity	$	50,830		$	38,200

CONSULTEX, INC.
Income Statement
For the Year Ended October 31
	2018			2017
Sales Revenue	$	157,000		$	160,000
Salaries and Wages Expense		97,800			96,800
Rent Expense		35,800			29,800
Utilities Expenses		19,500			19,800
Income before Income Tax Expense		3,900			13,600
Income Tax Expense		1,170			4,080
Net Income	$	2,730		$	9,520

Prepare a properly formatted Statement of Cash Flows for Consultex, Inc., for the year ended October 31, 2018 (using the indirect method). (Amounts to be deducted should be indicated with a minus sign.)

CONSULTEX, INC. Statement of Cash Flows For the Year Ended October 31, 2018 Cash Flows from Operating Activities: Changes in Current Assets and Current Liabilities Cash Flows from Investing Activities: Cash Flows from Financing Activities:

Answer 1

CONSULTEX, INC
Statement of Cash flows
For the year Ended October 31.2018
Cash flows from Operating Activities
Net Income		2,730.00
Changes in Current assets and Current Liabilities
Increase in Accounts Receivable	-   1,800.00
Decrease in Prepaid Rent	900.00
Decrease in Salaries and wages Payable	-       900.00	-   1,800.00
Cash Provided by Operating activities		930.00
Cash Flows from Investing Activities
Purchase of Land		- 15,000.00
Cash used in Investing Activities		- 15,000.00
Cash Flows from Financing Activities
Proceeds from issue of Common Stock	11,800.00
Payment of Dividend	-   1,800.00
Cash received from Notes payable	4,800.00
Repayment of Promissory note	-   3,000.00
Repurchase of Common Stock	-   1,000.00
Cash Provided by Financing Activities		10,800.00
Net Increase(Decrease) in Cash		-   3,270.00
Beginning Cash Position October 31 2017		13,600.00
Ending Cash Position October 31 2018		10,330.00