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Managerial Accounting 15th edition Garrison Noreen Brewer 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	$	61,000	$	40,000
Accounts receivable		710,000		530,000
Inventory		848,000		860,000
Prepaid expenses		10,000		5,000
Total current assets		1,629,000		1,435,000
Property, plant, and equipment		3,170,000		2,600,000
Less accumulated depreciation		810,000		755,000
Net property, plant, and equipment		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
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	970,000	$	670,000
Accrued liabilities		65,000		82,000
Income taxes payable		95,000		80,000
Total current liabilities		1,130,000		832,000
Bonds payable		820,000		600,000
Total liabilities		1,950,000		1,432,000
Stockholders equity:
Common stock		1,740,000		1,650,000
Retained earnings		573,000		478,000
Total stockholders equity		2,313,000		2,128,000
Total liabilities and stockholders' 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. 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:

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
Nonoperating 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

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Lomax Company Statement of Cash Flows Operating activities: Net income $170,000 Adjustments to convert net income to cash basis: Depreciation $95,000 Gain on sale of investments (60,000) Loss on sale of equipment 20,000 Increase in accounts receivable (180,000) Decrease in inventory 12,000 Increase in prepaid expenses (5,000) Increase in accounts payable 300,000 Decrease in accrued liabilities (17,000) Increase in income taxes payable 15,000 180,000 Net cash provided by operating activities 350,000 Investing activities: Loan to subsidiaries (44,000) (44,000) Financing activities: $90,000 90,000 396,000 Beginning cash and cash equivalents Ending cash and cash equivalents $396,000

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