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. DUX COMPANYComparative Balance SheetsDecember 31, 2024 and 2023($ in thousands) 20242023Assets Cash$ 102$ 48Accounts receivable5367Less: Allowance for uncollectible accounts(3)(2) Dividends receivable54Inventory9085Long-term investment5246Land9575Buildings and equipment202220Less: Accumulated depreciation (52)(90) $ 544$ 453Liabilities Accounts payable$ 37$ 64Salaries payable27Interest payable104Income tax payable1011Notes payable200Bonds payable8560Less: Discount on bonds(3)(4)Shareholders' Equity Common stock210200Paid-in capital- excess of par2420Retained earnings15791Less: Treasury stock (8)0 $ 544$ 453DUX COMPANYIncome Statement For the Year Ended December 31, 2024($ in thousands)Revenues Sales revenue$ 380 Dividend revenue5$ 385Expenses Cost of goods sold210 Salaries expense34 Depreciation expense7 Bad debt expense1 Interest expense8 Loss on sale of building2 Income tax expense29291Net income $ 94 Additional information from the accounting records: 1. A building that originally cost $60,000, and which was three-fourths depreciated, was sold for $13,000. 2. The common stock of Byrd Corporation was purchased for $6,000 as a long-term investment. 3. Property was acquired by issuing a 13%, seven-year, $20,000 note payable to the seller. 4. New equipment was purchased for $42,000 cash. 5. On January 1, 2024, bonds were sold at their $25,000 face value. 6. 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. 7. Cash dividends of $14,000 were paid to shareholders. 8. On November 12, 1,000 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, 2024. Present cash flows from operating activities by the direct method. Note: Do not round your intermediate calculations. Enter your answers in thousands (i.e., 10,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.
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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