Question

The comparative balance sheets for 2016 and 2015 and the statement of income for 2016 are given below for Dux Company. Additional information from Dux's accounting records is provided also.

DUX COMPANY Comparative Balance Sheets December 31, 2016 and 2015 ($ in 000s)
		2016		2015
Assets
Cash	$	62	$	35
Accounts receivable		57		62
Dividends receivable		5		4
Inventory		75		70
Long-term investment		45		40
Land		90		60
Buildings and equipment		291		300
Less: Accumulated depreciation		(62)		(90)
	$	563	$	481
Liabilities
Accounts payable	$	41	$	73
Salaries payable		2		4
Interest payable		9		5
Income tax payable		5		8
Notes payable		30		0
Bonds payable		120		95
Less: Discount on bonds		(5)		(6)
Shareholders' Equity
Common stock		210		200
Paid-in capital—excess of par		24		20
Retained earnings		137		82
Less: Treasury stock (at cost)		(10)		0
	$	563	$	481

DUX COMPANY Income Statement For Year Ended December 31, 2016 ($ in 000s)
Revenues
Sales revenue	$	350
Dividend revenue		5	$	355
Expenses
Cost of goods sold		195
Salaries expense		28
Depreciation expense		8
Interest expense		10
Loss on sale of building		3
Income tax expense		28		272
Net income			$	83

Additional information from the accounting records:

a.	A building that originally cost $48,000, and which was three-fourths depreciated, was sold for $9,000.
b.	The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.
c.	Property was acquired by issuing a (expression error)%, seven-year, $30,000 note payable to the seller.
d.	New equipment was purchased for $39,000 cash.
e.	On January 1, 2016, bonds were sold at their $25,000 face value.
f.	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.
g.	Cash dividends of $14,000 were paid to shareholders.
h.	On November 12, 1,000 shares of common stock were repurchased as treasury stock at a cost of $10,000.

Required:

Prepare the statement of cash flows of Dux Company for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (Do not round your intermediate calculations. Enter your answers in thousands (i.e., 5,000 should be entered as 5). Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Statement of cash flows for the year ended December 31, 2016
(Direct method)
Cash flow from operating activities
Cash collection from sale (Note 1)		355000
Cash payment for cost of goods sold (Note 2)		-232000
Cash payment for salaries (Note 3)		-30000
Cash payment for interest (Note 4)		-6000
Cash payment of income taxes (Note 5)		-31000
Net cash flow from operating activities		56000
Cash flow from investing activities
Sale of building (Note 6)	9000
Purchase of equipment	-39000
Net cash flow from investing activities		-30000
Cash flow from financing activities
Issue of bonds	25000
Purchase of treasury stock	-10000
Cash dividends paid	-14000
Net cash flow from financing activities		1000
Net cash flow		27000
Cash balance as on July1, 2016		35000
Cash balance as on June 30, 2017		62000
Cash from sale
Accounts receivable as on December 31, 2015	62000
Plus : Sale for the year	350000
Total	412000
Accounts receivable as on December 31, 2016	57000
Cash collection from sale (Note 1)	355000
Cash payment for cost of goods sold
Cost of goods sold for the year	195000
Plus: Balance of inventory on December 31, 2016	75000
Total	270000
Less: Balance of inventory on December 31, 2015	70000
Purchase of inventory	200000
Plus: Balance of accounts payable on December 31,2015	73000
	273000
Less: Balance of accounts payable on December 31,2016	41000
Cash payment for cost of goods sold (Note 2)	232000
Cash payment for salaries
Salaries expense for the year	28000
Plus: Beginning salaries payable	4000
Total	32000
Less: Ending salaries payable	2000
Cash payment for salaries (Note 3)	30000
Cash payment for interest
Interest expense for the year	10000
Plus: Beginning interest payable	5000
Total	15000
Less: Ending interest payable	9000
Cash payment for interest (Note 4)	6000
Cash payment for income tax
Income tax expense for the year	28000
Plus: Beginning income tax payable	8000
Total	36000
Less: Ending income tax payable	5000
Cash payment for income tax (Note 5)	31000
Sale of building
Cost of the building sold	48000
Less: Depreciation	36000
Net value of building	12000
Less: Loss on sale of building	3000
Cash received from sale of building     (Note 6)	9000