CHAPTER 12 Statement of Cash Flows 593 Required: LO 12-1, 12-2, 12-3, 124, 12-5 Determine whether the following account balances increased (I) or decreased (D) during the period: (a) Accounts Receivable. (h) Inventories. (c) Accounts Payable, and (d) Accrued Liabilities. E12-13 Preparing and Evaluating a Statement of Cash Flows (Indirect Method) from Comparative Balance Sheets and Income Statements 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 S16,000 to purchase land and repaid $2.000 principal on an existing promissory note. In March, the company paid $2,000 cash for dividends and S1,000 to repurchase and eliminate Consultex stock that had previously heen 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 investur for $12,000 cash. Year-end comparative balance sheets and income statements are presented below. CONSULTEX, INC. Balance Sheet October 31 2018 2017 $11,000 14,000 2,000 26.000 $53,000 $14.000 12,000 3.000 10.000 $39.00) 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 Retainei Farnings Total Liabilities and Stockholders' Equity $ 3.000 1.000 12.000 $ 2.000 1.000 15,000 20,000 15.000 $53,000 14.000 $39.000 CONSULTEX, INC. Income Statement For the Year Ended October 31 2018 2017 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 $161.000 97,000 30,0XX) 20.000 14,000 4,200 S 9.800) Requirements: 1. Prepare a properly formalled Statement of Cash Flows for Consultex, Inc., for the year ended October 31, 2018 (using the indirect method). 2. What one thing can Consultex reasonably change in 2019 to avoid depleting its cash