In: Accounting
The comparative balance sheets for 2018 and 2017 and the
statement of income for 2018 are given below for Dux Company.
Additional information from Dux's accounting records is provided
also.
DUX COMPANY |
||||||||
2018 |
2017 |
|||||||
Assets |
||||||||
Cash |
$ |
33 |
$ |
20 |
||||
Accounts receivable |
48 |
50 |
||||||
Less: Allowance for uncollectible accounts |
(4 |
) |
(3 |
) |
||||
Dividends receivable |
3 |
2 |
||||||
Inventory |
55 |
50 |
||||||
Long-term investment |
15 |
10 |
||||||
Land |
70 |
40 |
||||||
Buildings and equipment |
225 |
250 |
||||||
Less: Accumulated depreciation |
(25 |
) |
(50 |
) |
||||
$ |
420 |
$ |
369 |
|||||
Liabilities |
||||||||
Accounts payable |
$ |
13 |
$ |
20 |
||||
Salaries payable |
2 |
5 |
||||||
Interest payable |
4 |
2 |
||||||
Income tax payable |
7 |
8 |
||||||
Notes payable |
30 |
0 |
||||||
Bonds payable |
93 |
67 |
||||||
Shareholders' Equity |
||||||||
Common stock |
210 |
200 |
||||||
Paid-in capital—excess of par |
24 |
20 |
||||||
Retained earnings |
45 |
47 |
||||||
Less: Treasury stock |
(8 |
) |
0 |
|||||
$ |
420 |
$ |
369 |
|||||
DUX COMPANY |
||||||
Revenues |
||||||
Sales revenue |
$ |
200 |
||||
Dividend revenue |
3 |
$ |
203 |
|||
Expenses |
||||||
Cost of goods sold |
120 |
|||||
Salaries expense |
25 |
|||||
Depreciation expense |
5 |
|||||
Bad debt expense |
1 |
|||||
Interest expense |
8 |
|||||
Loss on sale of building |
3 |
|||||
Income tax expense |
16 |
178 |
||||
Net income |
$ |
25 |
||||
Additional information from the accounting records:
a. A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000.
b. Land was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller.
c. Cash dividends of $13,000 were paid to shareholders.
Required:
Prepare the statement of cash flows for Dux Company using the
indirect method. (Do not round intermediate
calculations. Amounts to be deducted should be indicated with a
minus sign. Enter your answers in thousands. (i.e., 10,000 should
be entered as 10).)
Dux Company | |||||||||||
Cash flow statement for the year ended 31st December 2018 | |||||||||||
$ in 000s | |||||||||||
Period Ending: | Dec-18 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income (loss) | 25 | ||||||||||
Adjustments to reconcile net income (loss) to net cash from operating activities: |
|||||||||||
Depreciation and amortization | 5 | ||||||||||
Loss on Sale of building | 3 | ||||||||||
(Increase) decrease in inventories | (5) | ||||||||||
(Increase) decrease in accounts receivable | 2 | ||||||||||
(Increase) decrease in Dividends receivable | (1) | ||||||||||
Increase (decrease) in accounts payable | (7) | ||||||||||
Increase (decrease) in salaries payable | (3) | ||||||||||
Increase (decrease) in interest payable | 2 | ||||||||||
Increase (decrease) in income tax payable | (1) | ||||||||||
Increase (decrease) in allowance for uncollectible accounts | 1 | ||||||||||
Net cash from operating activities | 21 | ||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of investments | (5) | ||||||||||
Proceeds from sales of Building | 7 | ||||||||||
Purchases of Building | -15 | ||||||||||
Net cash from investing activities | (13) | ||||||||||
Cash flows from financing activities: | |||||||||||
Repurchases of common stock | (8) | ||||||||||
Proceeds from bonds issued | 26 | ||||||||||
Dividends paid | (13) | ||||||||||
Net cash used in financing activities | 5 | ||||||||||
Net increase (decrease) in cash & cash equivalents | 13 | ||||||||||
Cash & cash equivalents, start of period | 20 | ||||||||||
Cash & cash equivalents, end of period | 33 | ||||||||||
The increase in common stock is mainly due to issue of stock dividend | |||||||||||
Which is reflected in retained earnings as retained earnings for current year are 45 which ideally should be 59, the difference is issue of shares using retained earnings | |||||||||||