Question

Required information

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	$	36			$	28
Accounts receivable		47				58
Less: Allowance for uncollectible accounts		(4	)			(3	)
Dividends receivable		7				6
Inventory		40				35
Long-term investment		28				26
Land		105				80
Buildings and equipment		201				230
Less: Accumulated depreciation		(35	)			(70	)
	$	425			$	390
Liabilities
Accounts payable	$	26			$	39
Salaries payable		2				4
Interest payable		5				2
Income tax payable		6				8
Notes payable		25				0
Bonds payable		85				60
Less: Discount on bonds		(3	)			(4	)
Shareholders' Equity
Common stock		210				200
Paid-in capital—excess of par		24				20
Retained earnings		56				61
Less: Treasury stock (at cost)		(12	)			0
	$	425			$	390

DUX COMPANY Income Statement For the Year Ended December 31, 2018 ($ in 000s)
Revenues
Sales revenue	$	280
Dividend revenue		7		$	287
Expenses
Cost of goods sold	$	165
Salaries expense		41
Depreciation expense		4
Bad debt expense		1
Interest expense		8
Loss on sale of building		7
Income tax expense	$	39			265
Net income				$	22

Additional information from the accounting records:

A building that originally cost $52,000, and which was three-fourths depreciated, was sold for $6,000.

The common stock of Byrd Corporation was purchased for $2,000 as a long-term investment.

Property was acquired by issuing a 11%, seven-year, $25,000 note payable to the seller.

New equipment was purchased for $23,000 cash.

On January 1, 2018, bonds were sold at their $25,000 face value.

On January 19, Dux issued a 5% 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 $12,000 were paid to shareholders.

On November 12, 1,000 shares of common stock were repurchased as treasury stock at a cost of $12,000.

Prepare the statement of cash flows for Dux Company. Use the T-account method to assist in your analysis. (Do not round your intermediate calculations. Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.

Answer 1

Statement of Cash Flows:
Net income as per income statement				22
Adjustment required for reconciliation
Dividend received				-7
Depreciation				4
Bad debt expense				1
Loss on sale of Building				7
Discount on bonds payable written off				1
Decrease in Accounts receivable				11
Increase in Inventory				-5
Decrease in Accounts payable				-13
Decrease in Salaries payable				-2
Increase in interest payable				3
Decrease in Tax payable				-2
Net cash provided from Operating activities					20
Cash flows from Investing activities:
Dividend received (7+6-7)				6
Purchase of Investment				-2
Equipment purchased				-23
Sale of Building				6
Net cash used in Investing activities					-13
Cash flows from Financing activities:
Issue of Bonds				25
Cash dividend paid				-12
Treasury stock purchased				-12
Net cash provided from financing activities					1
Net increase in cash					8
Beginning balance of cash					28
Ending balance of cash					36