Preparing and Evaluating a Statement of Cash Flows (Indirect Method) from Comparative Balance Sheets and Income Statements 

Consultex, Inc. was founded in 2012 as a small financial consulting business. The company had done reasonably well in 2012–2014 but started noticing its cash dwindle early in 2015. In January 2015, Consultex had paid $20,000 to purchase land and repaid $2,000 principal on an existing promissory note. In March, the company paid $2,800 cash for dividends and $1,200 to repurchase Consultex stock that had previously been issued for $1,200. To improve its cash position, Consultex borrowed $5,800 by signing a new promissory note in May and also issued stock to a new private investor for $12,800 cash. Year-end comparative balance sheets and income statements are presented below.

CONSULTEX, INC.
Balance Sheet
October 31
	2015			2014
Assets
Cash	$	7,730		$	13,800
Accounts Receivable		15,600			12,800
Prepaid Rent		2,400			3,800
Land		32,000			12,000
Total Assets	$	57,730		$	42,400
Liabilities and Stockholders’ Equity
Salaries and Wages Payable	$	2,400		$	3,800
Income Taxes Payable		1,200			1,200
Notes Payable (long-term)		16,600			12,800
Common Stock		21,400			9,800
Retained Earnings		16,130			14,800
Total Liabilities and Stockholders’ Equity	$	57,730		$	42,400

CONSULTEX, INC.
Income Statement
For the Year Ended October 31
	2015			2014
Sales Revenue	$	162,000		$	165,000
Salaries and Wages Expense		98,800			97,800
Rent Expense		36,800			30,800
Utilities Expenses		20,500			20,800
Income before Income Tax Expense		5,900			15,600
Income Tax Expense		1,770			4,680
Net Income	$	4,130		$	10,920

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		$4,130
Changes in Current Assets and Current Liabilities
Accounts Receivable	(2,800)
Prepaid Rent	1,400
Salaries and Wages Payable	(1,400)
Cash Provided by Operating Activities		1,330
Cash Flows from Investing Activities:
Purchased Land	(20,000)
Cash Used in Investing Activities		(20,000)
Cash Flows from Financing Activities:
Repaid Promissory Note Principal	(2,000)
Repurchased Company Common Stock	(1,200)
Issued New Company Common Stock	12,800
Paid Cash Dividends	(2,800)
Issued New Promissory Note	5,800
Cash Provided by Financing Activities		12,600
Net Decrease in Cash		?
Beginning Cash Position, October 31, 2014		13,800
Ending Cash Position, October 31, 2015		$19,870