Problem 14-14 Prepare and Interpret a Statement of Cash Flows (L014-1, LO14-2] 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 $ 92,000 $ 66,800 632,000 662,500 633,200 441.000 26,800 15,500 1,384,000 1,185,800 2.475,000 1,884,000 640,200 578,900 1.834.000 1,305, 100 124,100 193,000 141.000 80,500 $3,483,900 $2,764,400 Assets Current assets: Cash and cash equivalente Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Long-term investments Laans 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 $ 903,600 $ 591,000 37,600 60,900 160,300 134, 800 1,101,500 786,700 725,000 463,000 1,826,500 1,249,700 1.132,000 1,021,000 525,400 493,700 1.657,400 1.514,700 $3,483,900 $2,764,400 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 $401,000 were repaid during this year, c. Equipment was sold during this year for $80,500. The equipment had cost $172,000 and had $65,200 in accumulated depreciation on the date of sale. d. Long-term Investments were sold during the year for $152,000. These investments had cost $68,900 when purchased several years ago a. The company declared and paid a cash dividend this year. b. Bonds with a principal balance of $401,000 were repaid during this year. c. Equipment was sold during this year for $80,500. The equipment had cost $172,000 and had $65,200 in accumulated depreciation on the date of sale. d. Long-term investments were sold during the year for $152,000. These investments had cost $68,900 when purchased several years ago e. The subsidiaries did not repay any outstanding loans during the year. 1. Lomax did not repurchase any of its own stock during the year, The company reported net income this year as follows: $3,420,000 2, 120,400 1.299,600 1,041,300 258,300 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items dain on sale of Investiments Loss on sale of equipment Income before taxe Income taxes Net income $ 83,100 26.300) 56,800 315.100 101,000 $ 214,100 Required: Using the indirect method, prepare a statement of cash flows for this year, (List any deduction in cash outllows as negative amounts.) Lomax Company Statement of Cash Flows Operating activises: Not income Adjustments to convert not income to a cash basis Depreciation Gain on sale of investments Loss on sale of equipment Decrease in accounts receivable Increase in inventory Increase in propald expenses Lomax Company Statement of Cash Flows Operating activities: INet income Adjustments to convert net income to a cash basis: Depreciation Gain on sale of investments Loss on sale of equipment Decrease in accounts receivable + Increase in inventory Increase in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable 0 Net cash provided by operating activities Investing activities: Proceeds from sale of equipment Gain on sale of investments 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $ 0