Problem 14-14 Prepare and Interpret a Statement of Cash Flows [LO14-1, LO14-2]

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
Assets
Current assets:
Cash and cash equivalents	$	98,000	$	71,600
Accounts receivable		644,000		677,500
Inventory		640,400		447,000
Prepaid expenses		31,600		18,500
Total current assets		1,414,000		1,214,600
Property, plant, and equipment		2,505,000		1,908,000
Less accumulated depreciation		647,400		584,300
Net property, plant, and equipment		1,857,600		1,323,700
Long-term investments		136,700		211,000
Loans to subsidiaries		147,000		83,500
Total assets	$	3,555,300	$	2,832,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	913,200	$	597,000
Accrued liabilities		41,200		66,300
Income taxes payable		168,100		139,600
Total current liabilities		1,122,500		802,900
Bonds payable		755,000		481,000
Total liabilities		1,877,500		1,283,900
Stockholders equity:
Common stock		1,144,000		1,027,000
Retained earnings		533,800		521,900
Total stockholders equity		1,677,800		1,548,900
Total liabilities and stockholders' equity	$	3,555,300	$	2,832,800

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 $407,000 were repaid during this year.
c.	Equipment was sold during this year for $83,500. The equipment had cost $184,000 and had $72,400 in accumulated depreciation on the date of sale.
d.	Long-term investments were sold during the year for $164,000. These investments had cost $74,300 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:

Sales			$	3,540,000
Cost of goods sold				2,194,800
Gross margin				1,345,200
Selling and administrative expenses				1,073,100
Net operating income				272,100
Nonoperating items:
Gain on sale of investments	$	89,700
Loss on sale of equipment		28,100		61,600
Income before taxes				333,700
Income taxes				107,000
Net income			$	226,700

Required:
1.	Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.)

Worksheet	Difficulty: 3 Hard	Learning Objective: 14-02 Prepare a statement of cash flows using the indirect method to determine the net cash provided by operating activities.
Problem 14-14 Prepare and Interpret a Statement of Cash Flows [LO14-1, LO14-2]	Learning Objective: 14-01 Classify cash inflows and outflows as relating to operating, investing, or financing activities.