Question

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	$	72,000	$	50,800
Accounts receivable		592,000		612,500
Inventory		609,200		421,000
Prepaid expenses		10,800		5,500
Total current assets		1,284,000		1,089,800
Property, plant, and equipment		2,375,000		1,804,000
Less accumulated depreciation		616,200		560,900
Net property, plant, and equipment		1,758,800		1,243,100
Long-term investments		82,100		133,000
Loans to subsidiaries		121,000		70,500
Total assets	$	3,245,900	$	2,536,400
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	871,600	$	571,000
Accrued liabilities		25,600		42,900
Income taxes payable		134,300		118,800
Total current liabilities		1,031,500		732,700
Bonds payable		625,000		403,000
Total liabilities		1,656,500		1,135,700
Stockholders’ equity:
Common stock		1,092,000		1,001,000
Retained earnings		497,400		399,700
Total stockholders’ equity		1,589,400		1,400,700
Total liabilities and stockholders' equity	$	3,245,900	$	2,536,400

The following additional information is available about the company’s activities during this year:

The company declared and paid a cash dividend this year.

Bonds with a principal balance of $381,000 were repaid during this year.

Equipment was sold during this year for $70,500. The equipment had cost $132,000 and had $41,200 in accumulated depreciation on the date of sale.

Long-term investments were sold during the year for $112,000. These investments had cost $50,900 when purchased several years ago.

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					$	3,020,000
Cost of goods sold						1,872,400
Gross margin						1,147,600
Selling and administrative expenses						935,300
Net operating income						212,300
Nonoperating items:
Gain on sale of investments	$	61,100
Loss on sale of equipment		(20,300	)			40,800
Income before taxes						253,100
Income taxes						81,000
Net income					$	172,100

Lomax Company
Statement of Cash Flows
Operating activities:
Investing activities:
Financing activities:
Beginning cash and cash equivalents
Ending cash and cash equivalents

Answer 1

As nothing in the question was given regarding to direct or indirect method so I have prepared itas per Indirect Method of cash flow

Lomax company
statement of cash flow
For the year ended December -31
Cash flow from operating activity
Net Income		172100
Adjustment to reconcile net income to net cash provided by operating activity
Depreciation	96500
Loss on Equip	20300
Gain on investment	-61100
Decrease A/P	20500
Increase Inventory	-188200
Increase Prepaid exp	-5300
Increase A/R	300600
Decrease in Accrued exp	-17300
Increase in income tax payable	15500
		181500
Net cash flow from Operating activity		353600
Cash flow from Investing activity
Sale of Equipment	70500
Sale of Long term investment	112000
Loan to subsidiary	-50500
Purchase equipment and plant	-703000
Cash flow from Investing activity		-571000
Cash flow from Financing activity
issuance of bonds payable	603000
issuance of Common stock	91000
Retirement of bonds payable	-381000
Paid dividends	-74400
Cash flow from Financing activity		238600
Net cash change		21200
Cash balance as on end of the previous year		50800
Cash balance as on end of the Current year		72000

Working notes for the above answer is as under