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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 Cashi 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 2021 $ 158,000 98,000 Sales Revenue Salaries and Wages Expense Rent Expense Utilities Expenses Income before Income Tax Expense Income Tax Expense Net Income 36,000 19,700 4,300 1,300 $3,000 2021 $ 11,000 14,000 2,000 26,000 $ 53,000 $ 2,000 1,000 15,000 20,000 15,000 $53,000 2020 $ 161,000 97,000 30,000 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

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 Cashi 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 2021 $ 158,000 98,000 Sales Revenue Salaries and Wages Expense Rent Expense Utilities Expenses Income before Income Tax Expense Income Tax Expense Net Income 36,000 19,700 4,300 1,300 $3,000 2021 $ 11,000 14,000 2,000 26,000 $ 53,000 $ 2,000 1,000 15,000 20,000 15,000 $53,000 2020 $ 161,000 97,000 30,000 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

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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: 0 0 0
Transcribed Image Text: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: 0 0 0
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 2021 Sales Revenue Salaries and Wages Expense Rent Expense Utilities Expenses Income before Income Tax Expense Income Tax Expense Net Income $ 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 $ 2,000 1,000 15,000 20,000 2020 $ 161,000 97,000 30,000 20,000 2020 14,000 4,200 $9,800 $ 14,000 12,000 3,000 10,000 $ 39,000 9,000 15,000 14,000 $ 53,000 $ 39,000 $ 3,000 1,000 12,000
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 2021 Sales Revenue Salaries and Wages Expense Rent Expense Utilities Expenses Income before Income Tax Expense Income Tax Expense Net Income $ 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 $ 2,000 1,000 15,000 20,000 2020 $ 161,000 97,000 30,000 20,000 2020 14,000 4,200 $9,800 $ 14,000 12,000 3,000 10,000 $ 39,000 9,000 15,000 14,000 $ 53,000 $ 39,000 $ 3,000 1,000 12,000
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