Prepare a cash flow statement using the indirect method

Lomax Income Statement

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000,000

Cost of goods sold . . . . . . . . . . . . . . . . . 1,300,000

Gross margin . . . . . . . . . . . . . . . . . . . . . . 700,000

Selling and administrative expenses . . . . 490,000

Net operating income ............... 210,000

Non operating items:

Gain on sale of investments ........ $60,000

Loss on sale of equipment .......... (20,000) 40,000

Income before taxes ................ 250,000

Income taxes ...................... 80,000

Net income ....................... $ 170,000

Lomax Balance Sheet: Assets

	This Year	Last Year
Cash and cash equivalents	61,000	40,000
Accounts receivable	710,000	530,000	+180
Inventory	848,000	860,000	-12
Prepaid expenses	10,000	5,000	+5
Total current assets	1,629,000	1,435,000
PP&E	3,170,000	2,600,000
Less: Acc Depn	(810,000)	(755,000)
Net PP&E	2,360,000	1,845,000
Long term investments	60,000	110,000
Loans to subsidiaries	214,000	170,000
Total assets	4,263,000	3,560,000

Lomax Balance Sheet: Liabilities and Stock Equity

	This Year	Last Year
Accounts payable	970,000	670,000	+300
Accrued liabilities	65,000	82,000	-17
Income taxes payable	95,000	80,000	+15
Total current liabilities	1,130,000	832,000
Bonds payable	820,000	600,000	+220
Total liabilities	1,950,000	1,432,000
Common stock	1,740,000	1,650,000	+90
Retained earnings	573,000	478,000
Total stock equity	2,313,000	2,128,000
Total liabilities and stock equity	4,263,000	3,560,000

The following additional information is available about the companys 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. The 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