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 $21,000 to purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $3,000 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 $6,000 by signing a new promissory note in May and also issued stock to a new private investor for $13,000 cash. Year-end comparative balance sheets and income statements are presented below. points CONSULTEX, INC. Balance Sheet October 31 2018 2017 eBook Print $ 8,410 $15, 100 16,000 13,000 2,500 4,000 32,000 11,000 $58,910 $43, 100 References 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 $ 2,500 $ 4,000 1,100 1,100 17,000 13,000 21,900 10,000 16,410 15,000 $58,910 $43,100 CONSULTEX, INC. Income Statement For the Year Ended October 31 2018 2017 Sales Revenue $ 163,000 $166,000 Salaries and Wages Expense 99,000 98,000 Rent Expense 37,000 31,000 Utilities Expenses 20,700 21,000 Income before Income Tax Expense 6,300 16,000 Income Tax Expense 1,890 4,800 Net Income $ 4,410 $ 11,200

Answer 1

Solution

CONSULTEX, INC
Cash Flow Statement
For year ended 31st October 31 2018
A. Cash Flows from Operating Activity
Net Income		$         4,410.00
Changes in current operating assets and liabilities:
Increase in Accounts receivables	$        (3,000.00)
Decrease In Salaries and wages payable	$        (1,500.00)
Decrease in Prepaid rent	$          1,500.00
		$       (3,000.00)
Net cash flow from Operating activities		$         1,410.00
B. Cash flows from Investing Activities
Cash paid for purchase of land	$      (21,000.00)
Net cash flow used for investing activities		$     (21,000.00)
C. Cash Flows from Financing activities
Cash received from sale of common stock	$        13,000.00
Cash Paid for Purchase of Own shares	$        (1,100.00)
Payment of Dividend	$        (3,000.00)
Cash received from Issue of Notes payable	$          6,000.00
Repayment of Notes payable	$        (2,000.00)
Cash flows from Financing activities		$       12,900.00
Net Increase (Decrease) in Cash [A+B+C]		$       (6,690.00)
Cash at the beginning		$       15,100.00
Cash at the end		$         8,410.00