Problem 21-4A Prepare a statement of cash flows; direct method

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 building that originally cost $56,000, and which was three-fourths depreciated, was sold for $12,000.

The common stock of Byrd Corporation was purchased for $7,000 as a long-term investment.

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

New equipment was purchased for $41,000 cash.

On January 1, 2018, bonds were sold at their $25,000 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 $12,000 were paid to shareholders.

On November 12, 1,000 shares of common stock were repurchased as treasury stock at a cost

of $12,000.

Required:

Prepare the statement of cash flows of Dux Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. Prepare the reconciliation between net income and cash flows from operating activities if needed.

DUX COMPANY Comparative Balance Sheets December 31, 2018 and 2017 (S in 000s) 2018 2017 Assets S 47 64 S 107 Accounts receivable Dividends receivable Inventory Long-term investment Land Buildings and equipment 85 51 85 195 (44) 529 80 70 210 (80) S438 Less: Accumulated depreciation Liabilities Accounts payable Salaries payable Interest payable Income tax payable Notes payable Bonds payable S 59 6 S 40 10 15 80 Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital excess of par Retained earnings 210 24 153 20 Less: Treasury stock (at cost) (12)0 S438 529 DUX COMPANY Comparative Balance Sheets December 31, 2018 and 2017 (S in 000s) 2018 2017 Assets S 47 64 S 107 Accounts receivable Dividends receivable Inventory Long-term investment Land Buildings and equipment 85 51 85 195 (44) 529 80 70 210 (80) S438 Less: Accumulated depreciation Liabilities Accounts payable Salaries payable Interest payable Income tax payable Notes payable Bonds payable S 59 6 S 40 10 15 80 Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital excess of par Retained earnings 210 24 153 20 Less: Treasury stock (at cost) (12)0 S438 529