Question

The comparative statements of financial position for 2023 and 2022 and the statement of profit or loss for 2023 are given below for Dux Company. Additional information from Dux's accounting records is also provided.

DUX COMPANY Comparative Statements of Financial Position December 31, 2023 and 2022 ($ in 000s)
	2023				2022
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		95				70
Less: Discount on bonds		(2	)			(3	)
Shareholders' Equity
Ordinary shares		210				200
Share premium		24				20
Retained earnings		45				47
Less: Treasury shares		(8	)			0
	$	420			$	369

DUX COMPANY Statement of Profit or Loss For the Year Ended December 31, 2023 ($ 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 profit				$	25

Additional information from the accounting records:

1. A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000.
2. The ordinary shares of Byrd Corporation were purchased for $5,000 as a long-term investment.
3. Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller.
4. New equipment was purchased for $15,000 cash.
5. On January 1, 2023, bonds were sold at their $25,000 principal amount.
6. On January 19, Dux issued a 1-for-20 bonus issue (1,000 ordinary shares). Assume that the bonus issue was valued at the market price of $14 per share ($10 par value) at that time, and the corporation law requires a reclassification from retained earnings to issued capital.
7. Cash dividends of $13,000 were paid to shareholders.
8. On November 12, 500 ordinary shares were repurchased as treasury shares at a cost of $8,000.

Required:
Prepare the statement of cash flows for Dux Company using the indirect method, assuming Dux classifies dividend revenue and interest paid as operating activities and dividends paid as a financing activity. (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
Statement of Cash Flows-Indirect Method
For the Year Ended December 31, 2015
Cash Flows from Operating Activities
Net income		25
Adjustments to reconcile net income to net cash provided by operations:
Depreciation expense	5
Bad debt expense	1
Loss on sale of building	3
Decrease in Accounts Receivable	3
Increase in Dividends Receivable	-1
Increase in Inventory	-5
Decrease in Accounts payable	-7
Decrease in Salaries payable	-3
Increase in Interest payable	2
Decrease in Income tax payable	-1	-3
Net cash provided by operating activities		22
Cash Flows from Investing Activities
Sale proceeds from building	7
Purchase of equipment	-15
Purchase of long-term investment	-5
Net cash used by investing activities		-13
Cash Flows from Financing Activities
Issuance of bonds payable	25
Purchase of treasury shares	-8
Payment of cash dividends	-13
Net cash provided by financing activities		4
Net increase in cash		13
Cash balance, December 31, 2022		20
Cash balance, December 31, 2023		33
Noncash Investing and Financing Activities
Purchase of Property by Issuance of Note Payable		30