Problem 13-14 (Static) 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: Assets Current assets: Lomax Company Comparative Balance Sheet This Year Last Year 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 $ 61,000 710,000 848,000 $ 40,000 530,000 860,000 10,000 5,000 1,629,000 1,435,000 3,170,000 2,600,000 810,000 755,000 2,360,000 60,000 214,000 $ 4,263,000 1,845,000 110,000 170,000 $ 3,560,000 $ 970,000 65,000 95,000 1,130,000 $ 670,000 82,000 80,000 832,000 820,000 600,000 1,432,000 1,950,000 1,740,000 573,000 2,313,000 $ 4,263,000 1,650,000 478,000 2,128,000 $ 3,560,000 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 $350,000 were repaid during this year. c. 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. d. Long-term investments were sold during the year for $110,000. These investments had cost $50,000 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 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 $ 2,000,000 1,300,000 700,000 490,000 210,000 $ 60,000 (20,000) 40,000 250,000 80,000 $ 170,000 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.) Operating activities: Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Lomax Company Statement of Cash Flows 0 0 $ 0