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	$	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
Common stock		210				200
Paid-in capital—excess of par		24				20
Retained earnings		45				47
Less: Treasury stock (at cost)		(8	)			0
	$	420			$	369

DUX COMPANY Income Statement For the Year Ended December 31, 2018 ($ 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 income				$	25

Additional information from the accounting records:

A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000.

The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.

Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller.

New equipment was purchased for $15,000 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 $13,000 were paid to shareholders.

On November 12, 500 shares of common stock were repurchased as treasury stock at a cost of $8,000.

Required:
Prepare the T-account for Dux Company. (Do not round your intermediate calculations. Enter your answers in thousands. )

Answer 1

DUX COMPANY
Ledger Accounts
Cash					Accounts Receivable
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Beg.Bal.	20000	A/P	132000		Beg.Bal.	50000	Cash	202000
Sales	202000	Salaries	28000		Sales	200000
Dividend	2000	LT investment	5000
Building	7000	Interest	5000
Bonds	25000	Income Tax	17000			250000		202000
		Equipment	15000		End.Bal.	48000
		Dividend	13000
		Treasury Srtock	8000
	256000		223000
	33000
Allowance for uncollectible accounts					Inventory
Details	Debit	Details	Credit		Details	Debit	Details	Credit
		Beg.Bal.	3000		Beg.Bal.	50000	Dec.31	120000
		Bad Debt	1000		A/P	125000
	0		4000			175000		120000
		EndBal.	4000		End.Bal.	55000
Dividend Receivable					Long term invenstment
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Beg.Bal.	2000	Cash	2000		Beg.Bal.	10000	Cash
Revenue	3000				Cash	5000
	5000		2000			15000		0
End.Bal.	3000				End.Bal.	15000
Land					Building and equipment
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Beg.Bal.	40000				Beg.Bal.	250000	Sale	40000
Note Payable	30000				Cash	15000
	70000		0			265000		40000
End.Bal.	70000				End.Bal.	225000
Accumulated depreciation - Equipment					Accounts Payable
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Sale	30000	Beg.Bal.	50000		Cash	132000	Beg.Bal.	20000
		Expense	5000				Inventory	125000
	30000		55000			132000		145000
		End.Bal.	25000				End.Bal.	13000
Salaries Payable					Interest Payable
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Cash	28000	Beg.bal.	5000		Cash	5000	Beg.Bal.	2000
		Expense	25000				Expense	7000
	28000		30000			5000		9000
		End.Bal.	2000				End.Bal.	4000
Income Tax Payable					Notes Payable
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Cash	17000	Beg.bal.	8000				Beg.Bal.	0
		Expense	16000				Building	30000
	17000		24000			0		30000
		End.Bal.	7000				End.Bal.	30000
Bonds Payable					Discount on bonds
Details	Debit	Details	Credit		Details	Debit	Details	Credit
		Beg.Bal.	70000		Beg.Bal.	3000	Interest Expense	1000
		Cash	25000
			95000			3000		1000
					End.bal.	2000
Common Stock					Paid-in-capital inexcess of par
Details	Debit	Details	Credit		Details	Debit	Details	Credit
		Beg.Bal.	200000				Beg.Bal.	20000
		Retained earnings	10000				Retained earnings	4000
	0		210000			0		24000
		End.Bal.	210000				End.Bal.	24000
Retained Earnings					Treasury Stock
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Stock dividend	14000	Beg.Bal.	47000		Cash	8000
Cash dividend	13000	Net income	25000
	27000		72000			8000		0
		End.Bal.	45000		End.bal.	8000
Sales					Cost of goods sold
Details	Debit	Details	Credit		Details	Debit	Details	Credit
		Dec.31	200000		Dec.31	245000
			200000			245000
Salary expense					Depreciation Expense
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Payable	25000				Dec.31	5000
	25000					5000
Interest Expense					Bad debt Expense
Details	Debit	Details	Credit		Details	Debit	Details	Credit
Disount on bonds	1000				Dec.31	1000
Interest payable	7000
	8000					1000
Dvidend Revenue					Income Tax expense
Details	Debit	Details	Credit		Details	Debit	Details	Credit
		Receivable	3000		Dec.31	16000
			3000			16000
Loss on sale of building
Details	Debit	Details	Credit
Dec.31	3000
	3000