A comparative balance sheet and an income statement for Burgess Company are given below:

Burgess Company

Comparative Balance Sheet

$($dollars in millions$)$

Ending Balance Beginning Balance

Assets

Current assets:

Cash and cash equivalents $ $54$ $ $111$

Accounts receivable $790723$

Inventory $725670$

Total current assets $1,5691,504$

Property, plant, and equipment $1,6551,619$

Less accumulated depreciation $860696$

Net property,plant, and equipment $795923$

Total assets $ $2,364$ $ $2,427$

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $ $290$ $ $175$

Accrued liabilities $195155$

Income taxes payable $10787$

Total current liabilities $592417$

Bonds payable $490750$

Total liabilities $1,0821,167$

Stockholders' equity:

Common stock $220220$

Retained earnings $1,0621,040$

Total stockholders' equity $1,2821,260$

Total liabilities and stockholders' equity $ $2,364$ $ $2,427$

Burgess Company

Income Statement

$($dollars in millions$)$

Sales $ $4,150$

Cost of goods sold $2,840$

Gross margin $1,310$

Selling and administrative expenses $910$

Net operating income $400$

Nonoperating items:

Gain on sale of equipment $2$

Income before taxes $402$

Income taxes $142$

Net income $ $260$

Burgess also provided the following information:

The company sold equipment that had an original cost of $$42$ million and accumulated depreciation of $$22$ million. The cash proceeds from the sale were $$22$ million. The gain on the sale was $$2$ million.

The company did not issue any new bonds during the year.

The company paid a cash dividend during the year.

The company did not complete any common stock transactions during the year.

 

Required:

$1.$ Using the indirect method, prepare a statement of cash flows for the year. $($Enter your answers in millions not in dollars. List any deduction in cash and cash outflows as negative amounts.$)$

Answer rating: 100% (QA)

To prepare the statement of cash flows using the indirect method we need to analyze the changes in b... View the full answer