Question

DUX COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands)
	2021				2020
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		(8	)			0
	$	420			$	369

DUX COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands)
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:

1. A building that originally cost $40,000, and which was three-fourths depreciated, was sold for $7,000.
2. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.
3. Property was acquired by issuing a 13%, seven-year, $30,000 note payable to the seller.
4. New equipment was purchased for $15,000 cash.
5. On January 1, 2021, bonds were sold at their $25,000 face value.
6. 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.
7. Cash dividends of $13,000 were paid to shareholders.
8. On November 12, 500 shares of common stock were repurchased as treasury stock at a cost of $8,000.

Required:
Prepare the statement of cash flows for Dux Company using the indirect method. (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 COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in 000s) Cash flows from operating activities: Net income Adjustments for noncash effects: Changes in operating assets and liabilities: $ 0 Net cash flows from operating activities Cash flows from investing activities:

Answer 1

Solution:

Dux Company
Statement of Cash Flows
For year ended December 31, 2021
Particulars	Details	Amount (In'000)
Cash Flow from Operating Activities:
Net Income	$25.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$5.00
Loss on sale of building	$3.00
Decrease in accounts receivables ($47-$44)	$3.00
Increase in dividend receivables ($3-$2)	-$1.00
Increase in inventory ($55 - $50)	-$5.00
Decrease in accounts payable ($20 - $13)	-$7.00
Decrease in Salaries payable ($5 - $2)	-$3.00
Increase in interest payable ($4 - $2)	$2.00
Decrease in income tax payable ($8 - $7)	-$1.00
Decrease in discount on bond ($3 - $2)	$1.00
Net Cash provided by operating activities		$22.00
Cash Flow from Investing Activities:
Cash paid for purchase on investment	-$5.00
Cash paid for purchase of equipment	-$15.00
Proceed from sale of building	$7.00
Net Cash used in Investing activities		-$13.00
Cash Flow from Financing Activities:
Proceed from issue of bond	$25.00
Dividend Paid	-$13.00
Cash paid of repurchase of common stock	-$8.00
Net Cash Provided by financing activities		$4.00
Net Increase / (Decrease) in Cash		$13.00
Cash balance at beginning of year		$20.00
Cash balance at end of year		$33.00
Non Cash investing and financing activities:
Purchase of Property by issue of note		$30.00