Solve the following Consultex, Inc. was founded in 2012 as a small financial con
ID: 2436966 • Letter: S
Question
Solve the following
Consultex, Inc. was founded in 2012 as a small financial consulting business. The company had done reasonably well in 2012-2014 but started noticing its cash dwindle early in 2015 In January 2015. Consultex had paid $13,000 to purchase land and repaid $4,000 principal on an existing promissory note In March, the company paid $1,400 cash for dividends and $1,100 to repurchase Consultex stock that had previously been issued for $1,100. To improve its cash position, Consultex borrowed $4,400 by signing a new promissory note in May and also issued stock to a new private investor for $11,400 cash. Year end comparative balance sheets and income statements are presented below CONSULTEX, INC Balance Sheet October 31 2015 2014 Assets Cash Accounts Receivable Prepaid Rent Land s 8,970 $11,900 12,80011,400 7002400 24.00011.000 Total Assets $47 470$ 36,700 Liabilities and Stockholders Equity Salaries and Wages Payable Income Taxes Payable s 1.700 s 2.400 1,100 11,800 11.400 8,400 14.170 13.400 1.100 Notes Payable (long-term) Common Stock 18.700 Retained Earnings Total Liabilities and Stockholders Equity $47 470 $36,700 CONSULTEX?INC Income Statement For the Year Ended October 31 2015 2014 Sales Revenue $155.000 $158,000 96,400 29 400 19.400 Salaries and Wages Expense Rent E 97 400 35.400 19,100 Ep310 12,800 3,840 Income Tax Expense 930 Net Income S 2.170 $8,960 Required Prepare a properly formatted Statement of Cash Flows for Consultex, Inc for the year ended October 31, 2015 (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, 2015Explanation / Answer
Statement of cash flow cash flow from operating activity Net Income 2170 changes in current asset and current liabilities Increase in accounts receivable [12800-11400] (1400) decrease in prepaid rent [2400-1700] 700 decrease in salaries and wages payable (700) (1400) net cash flow from operating activity 770 cash flow from investing activity purchase of land (13000) net cash used by investing activity (13000) cash flow from financing activity issue of promissory note 4400 repayment of promissory note (4000) dividend paid (1400) issue of common stock 11400 repurchase of treasury stock (1100) net cash from financing activity 9300 net increase /(decrease)in cash during the year (2930) beginning cash balance 11900 cash at end 8970
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