Problem 15-14 (Algo) Prepare and Interpret a Statement of Cash Flows (LO15-1, LO15-2] 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 ok 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 $ 88,000 $ 63,600 624,000 652,500 628,400 437,000 23,600 13,500 1,364,000 1,166,608 2,455,000 1,868,000 635, 400 575, 300 1,819,600 1,292,700 115, 700 181,000 137,000 78,500 $3,436, 380 $2,718,800 $ 897,280 $ 587,000 35,200 57,300 155, 100 131,600 1,087,500 775,900 705,000 451,000 1,792,500 1,226,900 1,124,000 1,017,000 519,800 474,900 1,643,800 1,491,900 $3,436,300 $2,718,800 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 $397,000 were repaid during this year, c. Equipment was sold during this year for $78,500. The equipment had cost $164,000 and had $60,400 in accumulated depreciation on the date of sale. d. Long-term investments were sold during the year for $144,000. These investments had cost $65,300 when purchased several years ago e. 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 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating itens: Gain on sale of investments Loss on sale of equipment Income before taxes Income taxes Net Income $3,340,000 2,070,800 1,269, 280 1,020, 100 249, 180 $ 78,700 (25,100) 53,600 302,700 97,000 $ 205,700 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 $ 205,700 205,700 Lomax Company Statement of Cash Flows Operating activities: (Net income Adjustments to convert net income to a cash basis: a Decrease in accounts receivable Increase in inventory Increase in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable Book 0 Loss on sale of equipment Gain on sale of investments Net cash provided by operating activities Investing activities Additions to property, plant, and equipment 205,700 78,500 (58,500) Financing activities: 20,000 $ Cash dividends paid 651,000 (397,000) 107,000 (160 800) Increase in income taxes payable ts Loss on sale of equipment Gain on sale of investments Net cash provided by operating activities Investing activities: Additions to property, plant, and equipment 0 205,700 Book 78,500 (58,500) Financing activities: 20,000 $ Cash dividends paid 651,000 (397,000) 107,000 (160,800) Net increase in cash and cash equivalents Beginning cash and cash equivalents Ending cash and cash equivalents 200,200 425,900 63,600 489,500 $
