Question

A comparative balance sheet for Lomax Company containing data for the last two years is as...

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

Homework Answers

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

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