E12-13 Preparing and Evaluating a Statement of Cash Flows (Indirect Method) from Comparative Balance Sheets and Income Statements [LO 12-1, LO 12-2, LO 12-3, LO 12-4, LO 12-5]

Consultex, Inc. was founded in 2012 as a small financial consulting business. The company had done reasonably well in 20122014 but started noticing its cash dwindle early in 2015. In January 2015, 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 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.

CONSULTEX, INC.
Balance Sheet
October 31
	2015			2014
Assets
Cash	$	11,000		$	14,000
Accounts Receivable		14,000			12,000
Prepaid Rent		2,000			3,000
Land		26,000			10,000
Total Assets	$	53,000		$	39,000
Liabilities and Stockholders Equity
Salaries and Wages Payable	$	2,000		$	3,000
Income Taxes Payable		1,000			1,000
Notes Payable (long-term)		15,000			12,000
Common Stock		20,000			9,000
Retained Earnings		15,000			14,000
Total Liabilities and Stockholders Equity	$	53,000		$	39,000

CONSULTEX, INC.
Income Statement
For the Year Ended October 31
	2015			2014
Sales Revenue	$	158,000		$	161,000
Salaries and Wages Expense		98,000			97,000
Rent Expense		36,000			30,000
Utilities Expenses		19,700			20,000
Income before Income Tax Expense		4,300			14,000
Income Tax Expense		1,300			4,200
Net Income	$	3,000		$	9,800

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, 2015
Cash Flows from Operating Activities:
Net Income		$3,000
Changes in Current Assets and Current Liabilities
Accounts Receivable	(2,000)
Prepaid Rent	1,000
Salaries and Wages Payable	(1,000)
Cash Provided by Operating Activities		1,000
Cash Flows from Investing Activities:
Purchased Land	(16,000)
Cash Used in Investing Activities		(16,000)
Cash Flows from Financing Activities:
Repaid Promissory Note Principal
Paid Cash Dividends	(2,000)
Repurchased Company Common Stock
Issued New Promissory Note
Issued New Company Common Stock
Cash Provided by Financing Activities		(2,000)
Net Decrease in Cash		(3,000)
Beginning Cash Position, October 31, 2014		14,000
Ending Cash Position, October 31, 2015		$11,000