Consultex, Incorporated, was founded in 2018 as a small financial consulting business. The company had done reasonably well from 2018 through 2020 but started noticing its cash dwindle early in 2021. In January 2021, Consultex had paid $14,500 to purchase land and repaid $3,000 principal on an existing promissory note. In March, the company paid $1,700 cash for dividends and $1,100 to repurchase and eliminate Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex borrowed $4,700 by signing a new promissory note in May and also issued stock to a new private investor for $11,700 cash. Year-end comparative balance sheets and income statements are presented below. CONSULTEX, INCORPORATED Balance Sheet October 31 Assets Cash Accounts Receivable Prepaid Rent Land Total Assets Liabilities and Stockholders' Equity Salaries and Wages Payable Income Taxes Payable Notes Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Sales Revenue CONSULTEX, INCORPORATED Income Statement For the Year Ended October 31 2021 $ 9,490 13,400 1,850 25,500 $ 50,240 $ 1,850 1,100 13,400 19,300 14,590 $ 50,240 2021 $ 156,500 2020 $ 12,500 11,700 2,700 11,000 $ 37,900 $ 2,700 1,100 11,700 8,700 13,700 $ 37,900 2020 $ 159,500 Salaries and Wages Expense Rent Expense Income before Income Tax Expense Utilities Expenses Income Tax Expense Net Income Required: 97,700 96,700 35,700 29,700 19,400 19,700 3,700 13,400 1,110 4,020 $ 2,590 $ 9,380 1. Prepare a properly formatted Statement of Cash Flows for Consultex, Incorporated, for the year ended October 31, 2021 (using the indirect method). (Amounts to be deducted should be indicated with a minus sign.)
Consultex, Incorporated, was founded in 2018 as a small financial consulting business. The company had done reasonably well from 2018 through 2020 but started noticing its cash dwindle early in 2021. In January 2021, Consultex had paid $14,500 to purchase land and repaid $3,000 principal on an existing promissory note. In March, the company paid $1,700 cash for dividends and $1,100 to repurchase and eliminate Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex borrowed $4,700 by signing a new promissory note in May and also issued stock to a new private investor for $11,700 cash. Year-end comparative balance sheets and income statements are presented below. CONSULTEX, INCORPORATED Balance Sheet October 31 Assets Cash Accounts Receivable Prepaid Rent Land Total Assets Liabilities and Stockholders' Equity Salaries and Wages Payable Income Taxes Payable Notes Payable (long-term) Common Stock Retained Earnings Total Liabilities and Stockholders' Equity Sales Revenue CONSULTEX, INCORPORATED Income Statement For the Year Ended October 31 2021 $ 9,490 13,400 1,850 25,500 $ 50,240 $ 1,850 1,100 13,400 19,300 14,590 $ 50,240 2021 $ 156,500 2020 $ 12,500 11,700 2,700 11,000 $ 37,900 $ 2,700 1,100 11,700 8,700 13,700 $ 37,900 2020 $ 159,500 Salaries and Wages Expense Rent Expense Income before Income Tax Expense Utilities Expenses Income Tax Expense Net Income Required: 97,700 96,700 35,700 29,700 19,400 19,700 3,700 13,400 1,110 4,020 $ 2,590 $ 9,380 1. Prepare a properly formatted Statement of Cash Flows for Consultex, Incorporated, for the year ended October 31, 2021 (using the indirect method). (Amounts to be deducted should be indicated with a minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Consultex, Incorporated, was founded in 2018 as a small financial consulting business. The company had done reasonably well from
2018 through 2020 but started noticing its cash dwindle early in 2021. In January 2021, Consultex had paid $14,500 to purchase land
and repaid $3,000 principal on an existing promissory note. In March, the company paid $1,700 cash for dividends and $1,100 to
repurchase and eliminate Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex
borrowed $4,700 by signing a new promissory note in May and also issued stock to a new private investor for $11,700 cash. Year-end
comparative balance sheets and income statements are presented below.
CONSULTEX, INCORPORATED
Balance Sheet
October 31
2021
2020
Assets
Cash
Accounts Receivable
Prepaid Rent
Land
Total Assets
Liabilities and Stockholders' Equity
Salaries and Wages Payable
Income Taxes Payable
Notes Payable (long-term)
Common Stock
Retained Earnings
Total Liabilities and Stockholders' Equity
Sales Revenue
CONSULTEX, INCORPORATED
Income Statement
For the Year Ended October 31
$ 9,490
13,400
1,850
25,500
$ 50,240
$ 1,850
1,100
13,400
19,300
14,590
$ 50,240
2021
$ 156,500
$ 12,500
11,700
2,700
11,000
$ 37,900
$ 2,700
1,100
11,700
8,700
13,700
$ 37,900
2020
$ 159,500
Salaries and Wages Expense
Rent Expense
Utilities Expenses
Income before Income Tax Expense
Income Tax Expense
Net Income
97,700
96,700
35,700
29,700
19,400
19,700
3,700
13,400
1,110
4,020
$ 2,590
$ 9,380
Required:
1. Prepare a properly formatted Statement of Cash Flows for Consultex, Incorporated, for the year ended October 31, 2021 (using the
indirect method). (Amounts to be deducted should be indicated with a minus sign.)
CONSULTEX, INCORPORATED
Statement of Cash Flows
For the Year Ended October 31, 2021
Cash Flows from Operating Activities:
Changes in Current Assets and Current Liabilities
Cash Flows from Investing Activities:
Cash Flows from Financing Activities:
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