Prepare a Cash Flow Statement using the Direct Method

TRANSACTION DETAIL:

1. 2003 is the first year of operations for Tax Consultants Inc.

2. It adopted the accrual form of accounting.

3. The company issued 90,000 shares of stock at a par value of $1.00 per share for a total of $90,000 and deposited it in the companys checking account.

4. Since the company did not need all $90,000 for operations, it invested $30,000 in interest bearing investments at 10%.

5. On December 15, 2003 the company received $3,000 in interest income for the investments and deposited into its checking account.

6. It performed tax consulting services throughout the first year and billed clients every month for its personnel billed time of $125,000 spent with the client.

7. The billing period was net 30 days and at the end of the year there was $36,000 still in Accounts Receivable from the billings.

8. The company paid salary and benefit expenses of $55,000. The company paid all salary and benefit accruals for the 2003 year on December 15, 2003 leaving no payables for salary and benefits in the accounts payable account.

9. Tax Consultants, Inc. signed a contract to rent its office space and furniture and equipment for $15,000 for the year.

10. The office space and furniture rental agreement also specified that a $2,000 security deposit be paid upfront. On January 15, 2003, the company paid its $1,250 rent payment for January along with the security deposit for a total of $3,250.

11. The company was billed on the first of the month for the remainder of the rent and furniture for each of the 11 successive months at $1,250 per month. The company paid its last monthly rent payments for the year on December 15, 2003.

12. The company had other operating expenses of $13,000. The company was billed for expenses throughout the year and paid them within 30 days of due date. At the end of the year, there was $5,000 in accounts payable from outstanding invoices unpaid.

13. Income taxes based upon the companys monthly accruals totaling $6,000 was paid on December 31, 2003.

14. The company paid is stockholders a dividend of $14,000 on December 31, 2003 for its first year of operation.

Tax Consultants Inc. Income Statement For the year ended December 31, 2003

Revenues Billings from clients Income on investments Total Revenues Operating Expenses Salaries and Benefits Office space and furniture rental Other operating expense Total Expenses EBITA (Earnings Before Interest, Taxes, accumulated Amortization) Income tax expenses Net Income Dividends paid

$125,000 $ 3,000 --------- $128,000 $55,000 $15,000 $13,000 --------- $ 83,000 $ 45,000 ( 6,000) ---------- $ 39,000 $14,000

Tax Consultants Inc. Comparative Balance Sheet- For the years ending December 31

Assets				Liabilities and Stockholder's Equity
Current Assets Cash (checking account) Investments Accounts receivable Total current assets Long Term Assets Rent security deposit Total Assets	Dec. 31, 2003 $52,000 $30,000 $36,000 ----------- $118,000 $2,000 | $120,000 ======	Dec 31, 2002 $-0- $-0- $-0- --------- $0 $-0- $0 =====		Liabilities Accounts payable Total current Liabilities Equity Common stock Total Retained earnings Total Liabilities & Capital	Dec. 31, 2003 $ 5,000 --------- $ 5000 $90,000 $25,000 --------- $120,000 =======	Dec 31, 2002 $-0- --------- $0 $-0- $-0- ------- $-0- =====