Question

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


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:


Required:
1. Using the indirect method, prepare a statement of cash flows for this year.
2. What problems relating to the company’s activities are revealed by the statement of cash flows that you haveprepared?


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  • CreatedMay 20, 2014
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