Question

In: Accounting

Required information The comparative balance sheets for 2018 and 2017 and the statement of income for...

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 $ 66 $ 38
Accounts receivable 49 76
Less: Allowance for uncollectible accounts (4 ) (3 )
Dividends receivable 4 3
Inventory 85 80
Long-term investment 51 44
Land 85 70
Buildings and equipment 168 210
Less: Accumulated depreciation (44 ) (80 )
$ 460 $ 438
Liabilities
Accounts payable $ 40 $ 59
Salaries payable 3 6
Interest payable 9 3
Income tax payable 9 10
Notes payable 15 0
Bonds payable 80 55
Less: Discount on bonds (2 ) (3 )
Shareholders' Equity
Common stock 210 200
Paid-in capital—excess of par 24 20
Retained earnings 83 88
Less: Treasury stock (at cost) (12 ) 0
$ 460 $ 438
DUX COMPANY
Income Statement
For the Year Ended December 31, 2018
($ in 000s)
Revenues
Sales revenue $ 340
Dividend revenue 4 $ 344
Expenses
Cost of goods sold $ 230
Salaries expense 32
Depreciation expense 6
Bad debt expense 1
Interest expense 9
Loss on sale of building 2
Income tax expense $ 42 322
Net income $ 22


Additional information from the accounting records:

A building that originally cost $56,000, and which was three-fourths depreciated, was sold for $12,000.

The common stock of Byrd Corporation was purchased for $7,000 as a long-term investment.

Property was acquired by issuing a 15%, seven-year, $15,000 note payable to the seller.

New equipment was purchased for $14,000 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.

Required:
Prepare the T-accounts for Dux Company. (Do not round your intermediate calculations. Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

Solutions

Expert Solution

Cash Buildings
Event Debit Credit Event Event Debit Credit Event
1 12000 7000 2 56000 1
5 25000 14000 4
12000 7
12000 8
Accumulted Depreciation Loss on sale of building
Event Debit Credit Date Event Debit Credit Event
1 42000 1 2000
Long-term investment Land
Event Debit Credit Event Event Debit Credit Event
2 7000 3 15000
Note Payable Equipmet
Event Debit Credit Event Event Debit Credit Event
15000 3 4 14000
Bond Payable Retained Earnings
Event Debit Credit Event Event Debit Credit Event
25000 5 6 14000
7 12000
Common Stock Treasury Stock
Event Debit Credit Event Event Debit Credit Event
14000 5 8 12000

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