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 $ 57 $ 32

Accounts receivable 56 71

Less: Allowance for uncollectible accounts (5 ) (4 )

Dividends receivable 5 3

Inventory 79 62

Long-term investment 39 22

Land 123 64

Buildings and equipment 213 274

Less: Accumulated depreciation (37 ) (74 )

$ 530 $ 450

Liabilities

Accounts payable $ 25 $ 44

Salaries payable 5 6

Interest payable 7 4

Income tax payable 19 22

Notes payable 59 0

Bonds payable 119 82

Less: Discount on bonds (14 ) (27 )

Shareholders' Equity Common stock 222 212

Paid-in capital—excess of par 36 32

Retained earnings 67 75

Less: Treasury stock (15 ) 0

$ 530 $ 450

DUX COMPANY Income Statement For Year Ended December 31, 2018 ($ in 000s)

Revenues

Sales revenue $ 310

Dividend revenue 7

$ 317

Expenses

Cost of goods sold 132

Salaries expense 37

Depreciation expense 29

Bad debt expense 1

Interest expense 20

Loss on sale of building 7

Income tax expense 29

255

Net income $ 62

Additional information from the accounting records: A building that originally cost $88,000, and which was three-fourths depreciated, was sold for $15,000.

The common stock of Byrd Corporation was purchased for $17,000 as a long-term investment.

Property was acquired by issuing a 12%, seven-year, $59,000 note payable to the seller.

New equipment was purchased for $27,000 cash. On January 1, 2018, bonds were sold at their $37,000 face value.

On January 19, Dux issued a 3% stock dividend (1,000 shares). The market price of the $10 par value common stock was $14 per share at that time.

Cash dividends of $56,000 were paid to shareholders.

On November 30,000 shares of common stock were repurchased as treasury stock at a cost of $15,000.

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

Statement of Cash Flows (Indirect method)
Particulars	Amount in $000
Cash Flow from operating activities:
Net loss		62
Adjustments:
Loss on sale of building	7
Depreciation	29
Bad debt	1
Decrease in accounts receivable	16
Increase in Inventories	(17)
Increase in dividend receivable	(2)
Decrease in Accounts payable	(19)
Decrease in Salaries payable	(1)
Increase in Interest payable	3
Decrease in Income Tax payable	(3)
		14
Cash flow from Operating Activities		76
Cash Flow from Investing Activites:
Proceeds from sale of building	15
Cash paid for purchase of long term investment	(17)
Cash paid for purchase of building	(27)
Cash Paid for purchase of land
Net Cash flow from Investing activities		(29)
Cash Flow from Financing Activities:
Bonds payable	37
Cash dividend	(56)
Treasury stock purchased	(15)
Stock Dividend	14
Net cash flow from Financing activities		(20)
Net change in cash		27
Beginning cash balance		32
Ending cash balance		59

Property purchased by signing Note, thus cash flow is not affected by this