The comparative balance sheets for 2018 and 2017 and the statement of income for
ID: 2591300 • Letter: T
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.
Additional information from the accounting records:
a. A building that originally cost $80,000, and which was three-fourths depreciated, was sold for $15,000.
b. The common stock of Byrd Corporation was purchased for $15,000 as a long-term investment.
c. Property was acquired by issuing a 10%, seven-year, $56,000 note payable to the seller.
d. New equipment was purchased for $25,000 cash.
e. On January 1, 2018, bonds were sold at their $35,000 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 $15 per share at that time.
g. Cash dividends of $45,000 were paid to shareholders.
h. On November 36,000 shares of common stock were repurchased as treasury stock at a cost of $18,000.
Required:
Prepare the statement of cash flows for Dux Company using the indirect method. (Do not round intermediate calculations. Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands. (i.e., 10,000 should be entered as 10).))
Explanation / Answer
DUX COMPANY
Statement of Cash Flows
For year ended December 31, 2018 ($ in 000s)
Cash flows from operating activities:
Net income
$58
Adjustments for noncash effects:
Allowance for uncollectible accounts
$1
Depreciation expense
$25
Amortization of discount
$11
Loss on sale of building
$5
Changes in operating assets and liabilities:
Decrease in accounts receivable
$13
Increase in dividends receivable
-$1
Increase in inventory
-$15
Decrease in accounts payable
-$17
Decrease in salaries payable
-$3
Increase in interest payable
$2
Decrease in income tax payable
-$3
Net cash flows from operating activities
$76
Cash flows from investing activities:
Sale of building
$15
Purchase of equipment
-$25
Purchase of long term investment
-$15
Net cash flows from investing activities
-$25
Cash flows from financing activities:
Sale of bonds payable
$35
Payment of cash dividends
-$45
Purchase of treasury stock
-$18
Net cash flows from financing activities
-$28
Net increase in cash
$23
Cash balance, January 1
$30
Cash balance, December 31
$53
DUX COMPANY
Statement of Cash Flows
For year ended December 31, 2018 ($ in 000s)
Cash flows from operating activities:
Net income
$58
Adjustments for noncash effects:
Allowance for uncollectible accounts
$1
Depreciation expense
$25
Amortization of discount
$11
Loss on sale of building
$5
Changes in operating assets and liabilities:
Decrease in accounts receivable
$13
Increase in dividends receivable
-$1
Increase in inventory
-$15
Decrease in accounts payable
-$17
Decrease in salaries payable
-$3
Increase in interest payable
$2
Decrease in income tax payable
-$3
Net cash flows from operating activities
$76
Cash flows from investing activities:
Sale of building
$15
Purchase of equipment
-$25
Purchase of long term investment
-$15
Net cash flows from investing activities
-$25
Cash flows from financing activities:
Sale of bonds payable
$35
Payment of cash dividends
-$45
Purchase of treasury stock
-$18
Net cash flows from financing activities
-$28
Net increase in cash
$23
Cash balance, January 1
$30
Cash balance, December 31
$53