Question: Consultex, Inc., was founded in 2015 as
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 $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 and eliminate 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.
Requirements:
1. Prepare a properly formatted 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?
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