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	$	49			$	28
Accounts receivable		52				63
Less: Allowance for uncollectible accounts		(4	)			(3	)
Dividends receivable		6				3
Inventory		71				58
Long-term investment		31				18
Land		110				60
Buildings and equipment		217				266
Less: Accumulated depreciation		(33	)			(66	)
	$	499			$	427
Liabilities
Accounts payable	$	21			$	36
Salaries payable		6				10
Interest payable		8				5
Income tax payable		15				16
Notes payable		50				0
Bonds payable		111				78
Less: Discount on bonds		(10	)			(19	)
Shareholders' Equity
Common stock		218				208
Paid-in capital—excess of par		30				28
Retained earnings		66				65
Less: Treasury stock		(16	)			0
	$	499			$	427

DUX COMPANY Income Statement For Year Ended December 31, 2018 ($ in 000s)
Revenues
Sales revenue	$	270
Dividend revenue		8		$	278
Expenses
Cost of goods sold		128
Salaries expense		33
Depreciation expense		21
Bad debt expense		1
Interest expense		16
Loss on sale of building		6
Income tax expense		25			230
Net income				$	48

Additional information from the accounting records:

A building that originally cost $72,000, and which was three-fourths depreciated, was sold for $12,000.

The common stock of Byrd Corporation was purchased for $13,000 as a long-term investment.

Property was acquired by issuing a 15%, seven-year, $50,000 note payable to the seller.

New equipment was purchased for $23,000 cash.

On January 1, 2018, bonds were sold at their $33,000 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 $12 per share at that time.

Cash dividends of $35,000 were paid to shareholders.

On November 32,000 shares of common stock were repurchased as treasury stock at a cost of $16,000.

Required:
Prepare the statement of cash flows for Dux Company using the indirect method. (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

The statement of cash flows for Dux Company using the indirect method.
	(in $ 000)	(in $ 000)
Cash flow from operating activities
Net Income		$48.00
Loss on sale of building	$6.00
Depreciation expense	$21.00
Decrease in Accounts Receivables (net)	$12.00
Increase in Dividend receivable	-$3.00
Increase in Inventory	-$13.00
Decrease in Accounts Payable	-$15.00
Decrease in salaries payable	-$4.00
Increase in Interest payable	$3.00
Decrease in Discount on bonds	$9.00
Decrease in Income tax payable	-$1.00	$15.00
Net Cash available from Operating activities		$63.00
Cash flow from investing activities
Purchase of long term investment (common stock of Byrd Corporation)	-$13.00
Sale of building	$12.00
Purchase of equipment	-$23.00
Net cash used for Investing activities		-$24.00
Cash flow financing activities
Sale of bonds payable	$33.00
Dividend paid	-$35.00
Purchase of Treasury stock	-$16.00
Net cash used for Financing activities		-$18.00
Net Cash Surplus		$21.00
Add : Cash balance as on 1.1.2018		$28.00
Cash balance as on 31.12.18		$49.00