Question

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 Comparative Balance Sheets December 31, 2018 and 2017 ($ in 000s)
	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 Income Statement For the Year Ended December 31, 2018 ($ in 000s)
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).)

Answer 1

	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