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.
DUX COMPANY
Comparative Balance Sheets
December 31, 2016 and 2015($ in 000s)
2016
2015
Assets
Cash
$ 33
$ 20
Accounts receivable
44
47
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
2016
2015
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
$369
DUX COMPANY
Income Statement
For the Year Ended December 31, 2016($ in 000s)
Revenues
2016
2015
Sales revenue
$200
Dividend revenue
3
$203
Expenses
Cost of goods sold
120
Salaries expense
25
Depreciation expense
5
Interest expense
8
Loss on sale of building
3
Income tax expense
17
178
Net income
$ 25
Additional information from the accounting records:
· A building that originally cost $40,000, 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, $30,000 note payable to the seller.
· New equipment was purchased for $15,000 cash.
· On January 1, 2016, 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 $13,000 were paid to shareholders.
· 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 of Dux Company for the year ended December 31, 2016. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income to cash flows from operating activities.)
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