Question
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 | $ | 61,000 | $ | 40,000 | |
Accounts receivable | 710,000 | 530,000 | |||
Inventory | 848,000 | 860,000 | |||
Prepaid expenses | 10,000 | 5,000 | |||
Total current assets | 1,629,000 | 1,435,000 | |||
Property, plant, and equipment | 3,170,000 | 2,600,000 | |||
Less accumulated depreciation | 810,000 | 755,000 | |||
Net property, plant, and equipment | 2,360,000 | 1,845,000 | |||
Long-term investments | 60,000 | 110,000 | |||
Loans to subsidiaries | 214,000 | 170,000 | |||
Total assets | $ | 4,263,000 | $ | 3,560,000 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 970,000 | $ | 670,000 | |
Accrued liabilities | 65,000 | 82,000 | |||
Income taxes payable | 95,000 | 80,000 | |||
Total current liabilities | 1,130,000 | 832,000 | |||
Bonds payable | 820,000 | 600,000 | |||
Total liabilities | 1,950,000 | 1,432,000 | |||
Stockholders equity: | |||||
Common stock | 1,740,000 | 1,650,000 | |||
Retained earnings | 573,000 | 478,000 | |||
Total stockholders equity | 2,313,000 | 2,128,000 | |||
Total liabilities and stockholders' equity | $ | 4,263,000 | $ | 3,560,000 | |
The following additional information is available about the companys activities during this year:
- The company declared and paid a cash dividend this year.
-
Bonds with a principal balance of $350,000 were repaid during this year.
-
Equipment was sold during this year for $70,000. The equipment had cost $130,000 and had $40,000 in accumulated depreciation on the date of sale.
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Long-term investments were sold during the year for $110,000. These investments had cost $50,000 when purchased several years ago.
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The subsidiaries did not repay any outstanding loans during the year.
-
Lomax did not repurchase any of its own stock during the year.
The company reported net income this year as follows:
Sales | $ | 2,000,000 | ||||
Cost of goods sold | 1,300,000 | |||||
Gross margin | 700,000 | |||||
Selling and administrative expenses | 490,000 | |||||
Net operating income | 210,000 | |||||
Nonoperating items: | ||||||
Gain on sale of investments | $ | 60,000 | ||||
Loss on sale of equipment | (20,000 | ) | 40,000 | |||
Income before taxes | 250,000 | |||||
Income taxes | 80,000 | |||||
Net income | $ | 170,000 | ||||
Required:
Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.)
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