Answered step by step
Verified Expert Solution
Link Copied!

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.)

image text in transcribed

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

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing A Practical Approach

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton, Valerie Warren

3rd Canadian edition

1-119-40285-5, 111940276X, 978-1119566007

More Books

Students also viewed these Accounting questions

Question

What requirement did Health Canada initially require of Aurora?

Answered: 1 week ago