A comparative balance sheet for Lomax Company containing data for the last two years is as follows: Assets Current assets: Lomax Company Comparative Balance
A comparative balance sheet for Lomax Company containing data for the last two years is as follows: Assets Current assets: Lomax Company Comparative Balance Sheet This Year Last Year 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 $ 76,000 $ 54,000 600,000 622,500 425,000 614,000 14,000 7,500 1,304,000 1,109,000 2,395,000 621,000 1,774,000 90,500 125,000 $ 3,293,500 1,820,000 564,500 1,255,500 145,000 72,500 $ 2,582,000 46,500 $ 878,000 28,000 139,500 1,045,500 $ 575,000 122,000 743,500 645,000 415,000 1,690,500 1,158,500 1,100,000 1,005,000 503,000 418,500 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 503,000 1,603,000 $ 3,293,500 418,500 1,423,500 $ 2,582,000 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 $385,000 were repaid during this year. c. Equipment was sold during this year for $72,500. The equipment had cost $140,000 and had $46,000 in accumulated depreciation on the date of sale. d. Long-term investments were sold during the year for $120,000. These investments had cost $54,500 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: 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 $3,100,000 1,922,000 1,178,000 956,500 221,500 $ 65,500 (21,500) 44,000 Income before taxes Gain on sale of investments $ 65,500 Loss on sale of equipment (21,500) 44,000 265,500 85,000 $ 180,500 Income taxes Net income Required: Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash outflows as negati amounts.) Lomax Company Statement of Cash Flows Operating activities: Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents 0 0 $ 0
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