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 $16,000 to purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,000 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 $5,000 by signing a new promissory note in May and also issued stock to a new private investor for $12,000 cash. Year-end comparative balance sheets and income statements are presented below. Assets Cash Accounts Receivable Prepaid Rent Land Total Assets CONSULTEX, INCORPORATED Balance Sheet October 31 Liabilities and Stockholders' Equity Salaries and Wages Payable Income Taxes Payable Notes Payable (long-term) Common Stock Retained Earnings. Total Liabilities and Stockholders' Equity CONSULTEX, INCORPORATED Income Statement For the Year Ended October 31 Sales Revenue Salaries and Wages Expense Rent Expense Utilities Expenses. Income before Income Tax Expense Income Tax Expense Net Income 2021 $ 158,000 98,000 36,000 19,700 4,300 1,300 $3,000 2021 $ 11,000 14,000 2,000 26,000 $ 53,000 2020 $ 161,000 2020 $ 3,000 $ 2,000 1,000 1,000 15,000 12,000 20,000 9,000 15,000 14,000 $ 53,000 $ 39,000 97,000 30,000 20,000 14,000 4,200 $9,800 $ 14,000 12,000 3,000 10,000 $ 39,000
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 $16,000 to purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,000 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 $5,000 by signing a new promissory note in May and also issued stock to a new private investor for $12,000 cash. Year-end comparative balance sheets and income statements are presented below. Assets Cash Accounts Receivable Prepaid Rent Land Total Assets CONSULTEX, INCORPORATED Balance Sheet October 31 Liabilities and Stockholders' Equity Salaries and Wages Payable Income Taxes Payable Notes Payable (long-term) Common Stock Retained Earnings. Total Liabilities and Stockholders' Equity CONSULTEX, INCORPORATED Income Statement For the Year Ended October 31 Sales Revenue Salaries and Wages Expense Rent Expense Utilities Expenses. Income before Income Tax Expense Income Tax Expense Net Income 2021 $ 158,000 98,000 36,000 19,700 4,300 1,300 $3,000 2021 $ 11,000 14,000 2,000 26,000 $ 53,000 2020 $ 161,000 2020 $ 3,000 $ 2,000 1,000 1,000 15,000 12,000 20,000 9,000 15,000 14,000 $ 53,000 $ 39,000 97,000 30,000 20,000 14,000 4,200 $9,800 $ 14,000 12,000 3,000 10,000 $ 39,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
- 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.)
Transcribed Image Text: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:
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 $16,000 to purchase land
and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,000 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 $5,000 by signing a new promissory note in May and also issued stock to a new private investor for $12,000 cash. Year-end
comparative balance sheets and income statements are presented below.
Assets
Cash
Accounts Receivable
Prepaid Rent
Land
Total Assets
CONSULTEX, INCORPORATED
Balance Sheet
October 31
Liabilities and Stockholders' Equity
Salaries and Wages Payable
Income Taxes Payable
Notes Payable (long-term)
Common Stock
Retained Earnings
Total Liabilities and Stockholders' Equity
CONSULTEX, INCORPORATED
Income Statement
For the Year Ended October 31
Sales Revenue
Salaries and Wages Expense
Rent Expense
Utilities Expenses
Income before Income Tax Expense
Income Tax Expense
Net Income
2021
4,300
1,300
$ 3,000
$ 11,000
14,000
2,000
26,000
$ 53,000
$ 2,000
1,000
15,000
20,000
15,000
$ 53,000
2021
2020
$ 158,000 $ 161,000
98,000
97,000
36,000
30,000
19,700
20,000
14,000
4,200
$ 9,800
2020
$ 14,000
12,000
3,000
10,000
$ 39,000
$ 3,000
1,000
12,000
9,000
14,000
$ 39,000
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