Problem 13-14 Prepare and Interpret a Statement of Cash Flows (LO13-1, LO13-2) 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 $ 80,000 $ 57,200 608,000 632,500 618,800 429,000 17,200 9,500 1,324,000 1,128, 200 2,415,000 1,836,000 625, 800 568, 100 1,789,200 1,267, 900 98,900 157,000 129,000 74,500 $3,341,100 $2,627,600 Assets Current assets 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 Total stockholders' equity Total liabilities and stockholders' equity $ 884,400 $ 579,000 30,400 50, 100 144,700 125, 200 1,059,500 754,300 665,000 427,000 1,724,500 1,181,300 1,100,000 1,009,000 500, 600 437, 300 1,616, 600 1,446,300 $3,341,100 $2,627,600 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 $389,000 were repaid during this year. c. Equipment was sold during this year for $74,500. The equipment had cost $148,000 and had $50,800 in accumulated depreciation on the date of sale. d. Long-term investments were sold during the year for $128,000. These investments had cost $58,100 when purchased several years 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. ago. The company reported net income this year as follows: $3,180,000 1,9 1,200, 400 977,700 230, 700 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 Income before taxes Income taxes Net income $ 69,900 (22,700) 47,200 277, 900 89,000 188, 900 $ Required: Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash outflows as negative amounts.) Lomax Company Statement of Cash Flows Operating activities: Net income Adjustments to convert net income to a cash basis: $ 188,900 0 188,900 Investing activities: 0 Financing activities: 0 188,900 Beginning cash and cash equivalents Ending cash and cash equivalents $ 188,900