Problem 21-16 (Algo) Statement of cash flows; indirect method [LO21-4, 21-8]The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also. DUX COMPANYComparative Balance SheetsDecember 31, 2021 and 2020($ in thousands) 2021 2020 Assets Cash$117.0 $34.0 Accounts receivable 62.0 64.0 Less: Allowance for uncollectible accounts (3.0) (2.0) Dividends receivable 17.0 16.0 Inventory 69.0 64.0 Long-term investment 29.0 24.0 Land 84.0 40.0 Buildings and equipment 169.0 264.0 Less: Accumulated depreciation (7.0) (120.0) $537.0 $384.0 Liabilities Accounts payable$27.0 $34.0 Salaries payable 16.0 19.0 Interest payable 18.0 16.0 Income tax payable 21.0 22.0 Notes payable 44.0 0 Bonds payable 93.0 54.0 Less: Discount on bonds (2.0) (3.0) Shareholders' Equity Common stock 210.0 200.0 Paid-in capital—excess of par 24.0 20.0 Retained earnings 94.0 22.0 Less: Treasury stock (8.0) 0 $537.0 $384.0 DUX COMPANYIncome StatementFor the Year Ended December 31, 2021($ in thousands)Revenues Sales revenue$410.0 Dividend revenue 17.0 $427.0 Expenses Cost of goods sold 148.0 Salaries expense 53.0 Depreciation expense 1.0 Bad debt expense 1.0 Interest expense 36.0 Loss on sale of building 31.0 Income tax expense 44.0 314.0 Net income $113.0 Additional information from the accounting records:A building that originally cost $152,000, 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, $44,000 note payable to the seller.New equipment was purchased for $57,000 cash.On January 1, 2021, bonds were sold at their $39,000 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 $27,000 were paid to shareholders.On November 12, 12,500 shares of common stock were repurchased as treasury stock at a cost of $8,000. Required:Prepare the statement of cash flows for Dux Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands (i.e., 10,000 should be entered as 10).) DUX COMPANYStatement of Cash FlowsFor year ended December 31, 2021 ($ in 000s)Cash flows from operating activities:Net incomeAdjustments for noncash effects:Depreciation expenseAmortization of bond discountLoss on sale of buildingChanges in operating assets and liabilities:Decrease in accounts receivableIncrease in dividends receivableIncrease in inventoryDecrease in accounts payableDecrease in salaries payableIncrease in interest payableDecrease in income tax payableNet cash flows from operating activitiesCash flows from investing activities:Sale of buildingPurchase of long-term investmentPurchase of equipmentNet cash flows from investing activitiesCash flows from financing activities:Sale of bonds payablePurchase of treasury stockPayment of dividendsNet cash flows from financing activitiesNet increase in cashCash balance, January 1Cash balance, December 31Noncash investing and financing activities:Acquired land by issuing noteS113S$113000

Indirect method for a cash flow statement: The indirect method for a cash flow statement is a way to…

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Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 14P

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Problem 21-16 (Algo) Statement of cash flows; indirect method [LO21-4, 21-8]

The comparative balance sheets for 2021 and 2020 and the statement of income for 2021 are given below for Dux Company. Additional information from Dux’s accounting records is provided also.

DUX COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in thousands)
	2021		2020
Assets
Cash	$	117.0		$	34.0
Accounts receivable		62.0			64.0
Less: Allowance for uncollectible accounts		(3.0	)		(2.0	)
Dividends receivable		17.0			16.0
Inventory		69.0			64.0
Long-term investment		29.0			24.0
Land		84.0			40.0
Buildings and equipment		169.0			264.0
Less: Accumulated depreciation		(7.0	)		(120.0	)
	$	537.0		$	384.0
Liabilities
Accounts payable	$	27.0		$	34.0
Salaries payable		16.0			19.0
Interest payable		18.0			16.0
Income tax payable		21.0			22.0
Notes payable		44.0			0
Bonds payable		93.0			54.0
Less: Discount on bonds		(2.0	)		(3.0	)
Shareholders' Equity
Common stock		210.0			200.0
Paid-in capital—excess of par		24.0			20.0
Retained earnings		94.0			22.0
Less: Treasury stock		(8.0	)		0
	$	537.0		$	384.0

DUX COMPANY Income Statement For the Year Ended December 31, 2021 ($ in thousands)
Revenues
Sales revenue	$	410.0
Dividend revenue		17.0	$	427.0
Expenses
Cost of goods sold		148.0
Salaries expense		53.0
Depreciation expense		1.0
Bad debt expense		1.0
Interest expense		36.0
Loss on sale of building		31.0
Income tax expense		44.0		314.0
Net income			$	113.0

Additional information from the accounting records:

A building that originally cost $152,000, 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, $44,000 note payable to the seller.
New equipment was purchased for $57,000 cash.
On January 1, 2021, bonds were sold at their $39,000 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 $27,000 were paid to shareholders.
On November 12, 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:
Depreciation expense
Amortization of bond discount
Loss on sale of building
Changes in operating assets and liabilities:
Decrease in accounts receivable
Increase in dividends receivable
Increase in inventory
Decrease in accounts payable
Decrease in salaries payable
Increase in interest payable
Decrease in income tax payable
Net cash flows from operating activities
Cash flows from investing activities:
Sale of building
Purchase of long-term investment
Purchase of equipment
Net cash flows from investing activities
Cash flows from financing activities:
Sale of bonds payable
Purchase of treasury stock
Payment of dividends
Net cash flows from financing activities
Net increase in cash
Cash balance, January 1
Cash balance, December 31
Noncash investing and financing activities:
Acquired land by issuing note
S
113
S
$
113
0
0
0

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