Problem 21-16 (Algo) Statement of cash flows; indirect method [LO21-4, 21-8] The comparative balance sheets for 2024 and 2023 and the statement of income for 2024 are given below for Dux Company. Additional information from Dux's accounting records is provided also. Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Dividends receivable Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Liabilities Accounts payable Salaries payable DUX COMPANY Comparative Balance Sheets December 31, 2024 and 2023 (S in thousands) Interest payable Income tax payable Notes payable Bonds payable Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings Less: Treasury stock 2024 $ 57.0 52.0 (3.0) 7.0 59.0 19.0 74.0 209.0 (18.0) $ 456.0 $ 17.0 6.0 8.0 11.0 34.0 91.0 (2.0) 210.0 24.0 65.0 (8.0) $ 456.0 2023 $ 24.0 54.0 (2.0) 6.0 54.0 14.0 40.0 254.0 (70.0) $ 374.0 $ 24.0 9.0 6.0 12.0 0 62.0 (3.0) 200.0 20.0 44.0 $ 374.0
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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![Problem 21-16 (Algo) Statement of cash flows; indirect method [LO21-4, 21-8]
The comparative balance sheets for 2024 and 2023 and the statement of income for 2024 are given below for Dux Company.
Additional information from Dux's accounting records is provided also.
Assets
Cash
Accounts receivable
Less: Allowance for uncollectible accounts
Dividends receivable
Inventory
Long-term investment
Land
Buildings and equipment
Less: Accumulated depreciation
Liabilities
Accounts payable
Salaries payable
Interest payable
Income tax payable
Notes payable
Bonds payable
Less: Discount on bonds
Shareholders' Equity
Common stock
Paid-in capital-excess of par
Retained earnings
Less: Treasury stock
Revenues
DUX COMPANY
Comparative Balance Sheets
December 31, 2024 and 2023
(S in thousands)
Sales revenue
Dividend revenue
Expenses
DUX COMPANY
Income Statement
For the Year Ended December 31, 2024
(S in thousands)
Cost of goods sold
Salaries expense
Depreciation expense
Bad debt expense
Interest expense
Loss on sale of building
Income tax expense.
Net income
$ 260.0
7.0
128.0
33.0
2.0
1.0
16.0
11.0
24.0
G
$267.0
2024
Show Transcribed Text
215.0
$ 52.0
$ 57.0
52.0
(3.0)
7.0
59.0
19.0
74.0
209.0
(18.0)
$ 456.0
$ 17.0
6.0
8.0
11.0
34.0
91.0
(2.0)
210.0
24.0
65.0
(8.0)
$ 456.0
2023
$ 24.0
54.0
(2.0)
6.0
54.0
14.0
40.0
254.0
(70.0)
$ 374.0
$24.0
9.0
6.0
12.0
e
62.0
(3.0)
200.0
20.0
44.0
0
$ 374.0
J
Additional information from the accounting records:
a. A building that originally cost $72,000, and which was three-fourths depreciated, was sold for $7,000.
b. The common stock of Byrd Corporation was purchased for $5,000 as a long-term investment.
c. Property was acquired by issuing a 13%, seven-year, $34,000 note payable to the seller.
d. New equipment was purchased for $27,000 cash.
e. On January 1, 2024, bonds were sold at their $29,000 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 $17,000 were paid to shareholders.
h. 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.
Note: 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).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4f532a2d-41c4-4378-bc40-36a341559f3a%2F7261c8f9-2852-49c9-bfc1-8b1f3fde45dc%2F4en59et_processed.jpeg&w=3840&q=75)
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