Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 74,000 | $ | 52,400 |
Accounts receivable | 596,000 | 617,500 | ||
Inventory | 611,600 | 423,000 | ||
Prepaid expenses | 12,400 | 6,500 | ||
Total current assets | 1,294,000 | 1,099,400 | ||
Property, plant, and equipment | 2,385,000 | 1,812,000 | ||
Less accumulated depreciation | 618,600 | 562,700 | ||
Net property, plant, and equipment | 1,766,400 | 1,249,300 | ||
Long-term investments | 86,300 | 139,000 | ||
Loans to subsidiaries | 123,000 | 71,500 | ||
Total assets | $ | 3,269,700 | $ | 2,559,200 |
Liabilities and Stockholders' Equity | ||||
Current liabilities | ||||
Accounts payable | $ | 874,800 | $ | 573,000 |
Accrued liabilities | 26,800 | 44,700 | ||
Income taxes payable | 136,900 | 120,400 | ||
Total current liabilities | 1,038,500 | 738,100 | ||
Bonds payable | 635,000 | 409,000 | ||
Total liabilities | 1,673,500 | 1,147,100 | ||
Stockholders equity: | ||||
Common stock | 1,096,000 | 1,003,000 | ||
Retained earnings | 500,200 | 409,100 | ||
Total stockholders equity | 1,596,200 | 1,412,100 | ||
Total liabilities and stockholders' equity | $ | 3,269,700 | $ | 2,559,200 |
The following additional information is available about the companys activities during this year: | |
a. | The company declared and paid a cash dividend this year. |
b. | Bonds with a principal balance of $383,000 were repaid during this year. |
c. | Equipment was sold during this year for $71,500. The equipment had cost $136,000 and had $43,600 in accumulated depreciation on the date of sale. |
d. | Long-term investments were sold during the year for $116,000. These investments had cost $52,700 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: |
Sales | $ | 3,060,000 | ||
Cost of goods sold | 1,897,200 | |||
Gross margin | 1,162,800 | |||
Selling and administrative expenses | 945,900 | |||
Net operating income | 216,900 | |||
Nonoperating items: | ||||
Gain on sale of investments | $ | 63,300 | ||
Loss on sale of equipment | 20,900 | 42,400 | ||
Income before taxes | 259,300 | |||
Income taxes | 83,000 | |||
Net income | $ | 176,300 | ||
Required: | |
1. | Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.) |
Lomax Company Statement of Cash Flows Operating activities Adjustments to convert net income to cash basis: Investing activities: Financing activities Beginning cash and cash equivalents Ending cash and cash equivalents
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started