The comparative balance sheets for 2016 and 2015 and the statement of income for
ID: 2483932 • Letter: T
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.
On January 19, Dux issued a 5% stock dividend (1,000 shares). The market price of the $10 par value common stock was $11 per share at that time.
On November 42,000 shares of common stock were repurchased as treasury stock at a cost of $21,000.
Prepare the statement of cash flows for Dux Company using the indirect method. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. (i.e., 10,000 should be entered as 10).))
DUX COMPANYComparative Balance Sheets
December 31, 2016 and 2015
($ in 000s) 2016 2015 Assets Cash $ 59 $ 33 Accounts receivable 57 73 Dividends receivable 6 4 Inventory 81 63 Long-term investment 41 23 Land 125 65 Buildings and equipment 212 276 Less: Accumulated depreciation (38) (76) $ 543 $ 461 Liabilities Accounts payable $ 26 $ 46 Salaries payable 6 8 Interest payable 8 6 Income tax payable 20 24 Notes payable 60 0 Bonds payable 121 83 Less: Discount on bonds (15) (29) Shareholders' Equity Common stock 223 213 Paid-in capital—excess of par 34 33 Retained earnings 81 77 Less: Treasury stock (21) 0 $ 543 $ 461
Explanation / Answer
The cash flow statement is given below:
Dux Company Statement of Cash Flows For the Year Ended 2016 Cash Flow from Operating Activities Net Income 66 Add Depreciation Expense 31 Loss on Building 9 Decrease in Accounts Receivable (73-57) 16 Increase in Interest Payable (8-6) 2 Discount Amortization (29-15) 14 Less Increase in Dividend Receivable (6-4) -2 Increase in Inventory (63-81) -18 Decrease in Accounts Payable (26-46) -20 Decrease in Salaries Payable (6-8) -2 Decrease in Taxes Payable (20-24) -4 26 Cash Flow from Operating Activities (A) 92 Cash Flow from Investing Activities Sale of Building 14 Purchase of Long-Term Investment -18 Purchase of Equipment -28 Cash Flow Used by Investing Activities (B) -32 Cash Flow from Financing Activities Proceeds from Issuance of Bonds 38 Payment of Dividends -51 Purchase of Treasury Stock -21 Cash Flow Used by Financing Activities (C) -34 Net Increase in Cash (A+B+C) $26 Add Opening Cash Balance $33 Ending Cash Balance $59 (same as provided in the question)