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 $ 95,000 $ 69,200
Accounts receivable 638,000 670,000
Inventory 636,800 444,000
Prepaid expenses 29,200 17,000
Total current assets 1,399,000 1,200,200
Property, plant, and equipment 2,490,000 1,896,000
Less accumulated depreciation 643,800 581,600
Net property, plant, and equipment 1,846,200 1,314,400
Long-term investments 130,400 202,000
Loans to subsidiaries 144,000 82,000
Total assets $ 3,519,600 $ 2,798,600
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 908,400 $ 594,000
Accrued liabilities 39,400 63,600
Income taxes payable 164,200 137,200
Total current liabilities 1,112,000 794,800
Bonds payable 740,000 472,000
Total liabilities 1,852,000 1,266,800
Stockholders equity:
Common stock 1,138,000 1,024,000
Retained earnings 529,600 507,800
Total stockholders equity 1,667,600 1,531,800
Total liabilities and stockholders' equity $ 3,519,600 $ 2,798,600

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 $404,000 were repaid during this year.
c. Equipment was sold during this year for $82,000. The equipment had cost $178,000 and had $68,800 in accumulated depreciation on the date of sale.
d. Long-term investments were sold during the year for $158,000. These investments had cost $71,600 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 $ 3,480,000
Cost of goods sold 2,157,600
Gross margin 1,322,400
Selling and administrative expenses 1,057,200
Net operating income 265,200
Nonoperating items:
Gain on sale of investments $ 86,400
Loss on sale of equipment 27,200 59,200
Income before taxes 324,400
Income taxes 104,000
Net income $ 220,400

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

Statements Of Cash Flows

1. Operating activities

2.

3. Adjustments to convert net income to cash basis

4.

5.

6.

7.

8.

9.

10.

11.

12

13.

14.

15. Investing activities

16.

17.

18.

19.

20.

21.

22. Financing activites

23.

24.

25.

26.

27.

28.

29.

30. Beginning Cash

31. Ending Cash

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

Step: 3

blur-text-image

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 With The Computer

Authors: Wayne S. Boutell

1st Edition

0520363329, 978-0520363328

More Books

Students also viewed these Accounting questions