Q1:

Suppose the income statement for Goggle Company reports $175 of net income, after deducting depreciation of $15. The company bought equipment costing $160 and obtained a long-term bank loan for $164. The companys comparative balance sheet, at December 31, is presented here.

Required:

1. 1. Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and/or financing activities (+ for increase and for decrease).
2. 2. Prepare a statement of cash flows using the indirect method.
3. 6. Are the cash flows typical of a start-up, healthy, or troubled company?

Req.1

Calculate the change in each balance sheet account and indicate whether each account relates to operating, investing, and/or financing activities (+ for increase and for decrease). (Select "NE" if there is no effect. Enter all amounts as positive values.)

	Previous Year	Current Year	Change		Type
Cash	$ 55	$394
Accounts Receivable	95	215
Inventory	360	155
Equipment	600	760
Accumulated Dep-Equip	(25)	(40)
Total	$1085	$1484
Salaries and Wages Payable	$30	$90
Notes Payable (long-term)	465	629
Common Stock	30	30
Retained Earnings	560	735
Total	$ 1085	$ 1484

Req.2

Prepare a statement of cash flows using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Req. 3

Are the cash flows typical of a start-up, healthy, or troubled company?

Q2:

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 $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, INCORPORATED
Balance Sheet
October 31
	2021	2020
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, INCORPORATED
Income Statement
For the Year Ended October 31
	2021	2020
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:

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.)

Q3:

Dive In Company was started several years ago by two diving instructors. The companys comparative balance sheets and income statement, as well as additional information, are presented below.

	Current Year	Previous Year
Balance Sheet at December 31
Cash	$ 5,720	$ 6,610
Accounts Receivable	2,800	1,400
Prepaid Rent	280	140
Total Assets	$ 8,800	$ 8,150
Salaries and Wages Payable	$ 1,250	$ 2,900
Common Stock	3,000	1,900
Retained Earnings	4,550	3,350
Total Liabilities and Stockholders Equity	$ 8,800	$ 8,150
Income Statement
Service Revenue	$ 53,750
Salaries and Wages Expense	48,000
Rent and Office Expenses	4,550
Net Income	$ 1,200

Additional Data:

1. Rent is paid in advance each month, and Office Expenses are paid in cash as incurred.
2. An owner contributed capital by paying $1,100 cash in exchange for the companys stock.

Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the direct method. (Amounts to be deducted should be indicated by a minus sign.)