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 $12,500 to purchase land and repaid $4,000 principal on an existing promissory note. In March, the company paid $1,300 cash for dividends and $1,200 to repurchase and eliminate Consultex stock that had previously been issued for $1,200. To improve its cash position, Consultex borrowed $4,300 by signing a new promissory note in May and also issued stock to a new private investor for $11,300 cash. Year-end comparative balance sheets and income statements are presented below.
CONSULTEX, INC. | ||||||
Balance Sheet | ||||||
October 31 | ||||||
2018 | 2017 | |||||
Assets | ||||||
Cash | $ | 8,130 | $ | 10,800 | ||
Accounts Receivable | 12,600 | 11,300 | ||||
Prepaid Rent | 1,650 | 2,300 | ||||
Land | 24,500 | 12,000 | ||||
Total Assets | $ | 46,880 | $ | 36,400 | ||
Liabilities and Stockholders’ Equity | ||||||
Salaries and Wages Payable | $ | 1,650 | $ | 2,300 | ||
Income Taxes Payable | 1,200 | 1,200 | ||||
Notes Payable (long-term) | 11,600 | 11,300 | ||||
Common Stock | 18,400 | 8,300 | ||||
Retained Earnings | 14,030 | 13,300 | ||||
Total Liabilities and Stockholders’ Equity | $ | 46,880 | $ |
36,400 |
||
CONSULTEX, INC. | ||||||
Income Statement | ||||||
For the Year Ended October 31 | ||||||
2018 | 2017 | |||||
Sales Revenue | $ | 154,500 | $ | 157,500 | ||
Salaries and Wages Expense | 97,300 | 96,300 | ||||
Rent Expense | 35,300 | 29,300 | ||||
Utilities Expenses | 19,000 | 19,300 | ||||
Income before Income Tax Expense | 2,900 | 12,600 | ||||
Income Tax Expense | 870 | 3,780 | ||||
Net Income | $ | 2,030 | $ | 8,820 | ||
Required:
Solution
CONSULTEX, INC | ||
Cash Flow Statement | ||
For year ended 31st October 31 2018 | ||
A. Cash Flows from Operating Activity | ||
Net Income | $ 2,030.00 | |
Changes in current operating assets and liabilities: | ||
Increase in Accounts receivables | $ (1,300.00) | |
Decrease In Salaries and wages payable | $ (650.00) | |
Decrease in Prepaid rent | $ 650.00 | |
$ (1,300.00) | ||
Net cash flow from Operating activities | $ 730.00 | |
B. Cash flows from Investing Activities | ||
Cash paid for purchase of land | $ (12,500.00) | |
Net cash flow used for investing activities | $ (12,500.00) | |
C. Cash Flows from Financing activities | ||
Cash received from sale of common stock | $ 11,300.00 | |
Cash Paid for Purchase of Own shares | $ (1,200.00) | |
Payment of Dividend | $ (1,300.00) | |
Cash received from Issue of Notes payable | $ 4,300.00 | |
Repayment of Notes payable | $ (4,000.00) | |
Cash flows from Financing activities | $ 9,100.00 | |
Net Increase (Decrease) in Cash [A+B+C] | $ (2,670.00) | |
Cash at the beginning | $ 10,800.00 | |
Cash at the end | $ 8,130.00 |
.General notes for cash flow
Cash is increased when Current liability increase or Current asset
Decrease.
Cash is Decreased when Current liability Decrease or Current asset
Increase.
Depreciation or loss on sale of any asset is a non cash expense
hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and
hence will be deducted from operating income.
Consultex, Inc., was founded in 2015 as a small financial consulting business. The company had done...
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 $12,500 to purchase land and repaid $4,000 principal on an existing promissory note. In March, the company paid $1,300 cash for dividends and $1,200 to repurchase and eliminate Consultex stock that had previously been issued for $1,200. To improve its cash position, Consultex borrowed $4,300...
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 $20,000 to purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,800 cash for dividends and $1.200 to repurchase and eliminate Consultex stock that had previously been issued for $1,200. To improve its cash position, Consultex borrowed $5,800...
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...
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 $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...
4. 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 $12,000 to purchase land and repaid $4,000 principal on an existing promissory note. In March, the company paid $1.200 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...
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