A comparative balance sheet for Lomax Company containing data for the last two y

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 $ 61,000 $ 40,000 710,000 530,000 860,000 5,000 Cash and cash equivalents Accounts receivable 848,000 10,000 Inventory Prepaid expenses Total current assets Property, plant, and equipment 1,629,000 1435,000 3,170,000 2,600,000 755,000 810,000 Less accumulated depreciation Net property, plant, and equipment Long-term investments Loans to subsidiaries Total assets 2,360,000 1,845,000 110,000 214,000 170,000 $ 4,263,000 S 3,560,000 60,000 Liabilities and Stockholders' Equity Current liabilities $ 970,000 S 670,000 82.000 80,000 Accounts payable 65,000 95,000 Accrued liabilities Income taxes payable 1,130,000 832,000 600,000 Total current liabilities Bonds payable Total liabilities Stockholders' equity: 820,000 1,950,000 1,432,000 1,740,000 1,650,000 Common stock Retained earnings 573,000 478,000 2,313,000 2,128,000 S 4,263,000 S 3,560,000 Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

Operation activities Amount Net Profit/income earned during the year 170000 Adjustment to convert net income to cash basis Add- loss on sale of equipment 20000 Cash Dividend (retained earnings) 95000 Provision for tax 95000 Depreciation on equipment 95000 Less gain on sale of investment 60000 Operating cash before working capital changes 415000 Less- change in woring capital Increase in AR 180000 Increase in prepaid exp 5000 Decrease in accrued liability 15000 (200000) Add- change in woring capital Decrease in inventory 12000 Increase in account payable 300000 Operating profit Before tax 527000 Less - tax paid 80000 Operating profit after taxes 447000 Cash flow from operating activity 447000 Investing activities Sale of equipment 70000 Investment (136000) Cash flow from investing activity (66000) Financing activities Repayment of bonds (450000) Issue of common stock 90000 Cash flow from financing activity (360000) Begining cash and cash equivalent 40000 Ending cash and cash equivalent 61000

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