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 000s)
2021 2020
Assets
Cash $ 62 $ 35
Accounts receivable 58 62
Dividends receivable 5 4
Inventory 75 70
Long-term investment 45 40
Land 90 60
Buildings and equipment 291 300
Less: Accumulated depreciation (62) (90)
$ 564 $ 481
Liabilities
Accounts payable $ 41 $ 73
Salaries payable 2 4
Interest payable 9 5
Income tax payable 5 8
Notes payable 30 0
Bonds payable 120 95
Less: Discount on bonds (5) (6)
Shareholders' Equity
Common stock 210 200
Paid-in capital—excess of par 24 20
Retained earnings 138 82
Less: Treasury stock (at cost) (10) 0
$ 564 $ 481
2
DUX COMPANY
Income Statement
For the Year Ended December 31, 2021
($ in 000s)
Revenues
Sales revenue $ 350
Dividend revenue 5 $ 355
Expenses
Cost of goods sold 195
Salaries expense 28
Depreciation expense 8
Interest expense 10
Loss on sale of building 3
Income tax expense 27 271
Net income $ 84
Additional information from the accounting records:
a. A building that originally cost $48,000, and which was three-fourths depreciated, was sold
for $9,000.
b. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.
c. Property was acquired by issuing a 12%, seven-year, $30,000 note payable to the seller.
d. New equipment was purchased for $39,000 cash.
e. On January 1, 2021, bonds were sold at their $25,000 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 $14 per share at that time.
g. Cash dividends of $14,000 were paid to shareholders.
h. On November 12, 1,000 shares of common stock were repurchased as treasury stock at a cost
of $10,000.
Required:
Prepare the statement of cash flows of Dux Company for the year ended December 31, 2021.
Present cash flows from operating activities by the direct method. Prepare the reconciliation
between net income and cash flows from operating activities if needed.