A comparative balance sheet for Lomax Company containing data for the last two years is as follows: Lomax Company Comparative Balance Sheet This Year Last Year $ 94,000 $ 68,400 636,000 667,500 635,600 443,000 28,400 16,500 1,394,000 1,195,400 2,485,000 1,892,000 642,600 580,700 1,842,400 1,311,300 128,300 199,000 143,000 81,500 $3,507,700 $2,787,200 Assets Current assets: Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Loans to subsidiaries Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 906,800 $ 593,000 38,800 62,700 162,900 136,400 1,108,500 792, 100 735,000 469,000 1,843,500 1,261,100 1,136,000 1,023,000 528, 200 503, 100 1,664,200 1,526, 100 $3,507,700 $2,787,200 The following additional information is available about the company's activities during this year: a. The company declared and paid a cash dividend this year. b. Bonds with a principal balance of $403,000 were repaid during this year. C. Equipment was sold during this year for $81,500. The equipment had cost $176,000 and had $67,600 in accumulated depreciation on the date of sale. d. Long-term investments were sold during the year for $156,000. These investments had cost $70,700 when purchased several years ago. e. The subsidiaries did not repay any outstanding loans during the year. f. Lomax did not repurchase any of its own stock during the year. The company reported net income this year as follows: $3,460,000 2, 145,200 1,314,800 1,051,900 262,900 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net income $ 85,300 (26,900) 58,400 321,300 103,000 $ 218,300 Required: Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash outflows as negative amounts.) Lomax Company Statement of Cash Flows Operating activities: Net income Adjustments to convert net income to a cash basis: Decrease in accounts receivable Increase in accounts payable $ 218,300 0 218,300 Investing activities: 0 Financing activities: 0 218,300 Beginning cash and cash equivalents Ending cash and cash equivalents $ 218,300
