Question
A comparative balance sheet and an income statement for Blankley Company are presented below: Blankley Company Comparative Balance Sheet (dollars in millions) Ending Balance Beginning
A comparative balance sheet and an income statement for Blankley Company are presented below:
Blankley Company Comparative Balance Sheet (dollars in millions) | ||||
Ending Balance | Beginning Balance | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 57 | $ | 117 |
Accounts receivable | 820 | 750 | ||
Inventory | 740 | 682 | ||
| | | | |
Total current assets | 1,617 | 1,549 | ||
| | | | |
Property, plant, and equipment | 1,685 | 1,646 | ||
Less accumulated depreciation | 878 | 705 | ||
| | | | |
Net property, plant, and equipment | 807 | 941 | ||
| | | | |
Total assets | $ | 2,424 | $ | 2,490 |
| | | | |
Liabilities and Stockholders' equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 296 | $ | 178 |
Accrued liabilities | 198 | 152 | ||
Income taxes payable | 113 | 90 | ||
| | | | |
Total current liabilities | 607 | 420 | ||
Bonds payable | 505 | 780 | ||
| | | | |
Total liabilities | 1,112 | 1,200 | ||
| | | | |
Stockholders' equity: | ||||
Common stock | 235 | 235 | ||
Retained earnings | 1,077 | 1,055 | ||
| | | | |
Total stockholders' equity | 1,312 | 1,290 | ||
| | | | |
Total liabilities and stockholders' equity | $ | 2,424 | $ | 2,490 |
| | | | |
|
Blankley Company Income Statement (dollars in millions) | ||
Sales | $ | 4,240 |
Cost of goods sold | 2,900 | |
| | |
Gross margin | 1,340 | |
Selling and administrative expenses | 916 | |
| | |
Net operating income | 424 | |
Nonoperating items: Gain on sale of equipment | 2 | |
| | |
Income before taxes | 426 | |
Income taxes | 148 | |
| | |
Net income | $ | 278 |
| | |
|
Blankley also provided the following information: |
1. | The company sold equipment that had an original cost of $48 million and accumulated depreciation of $25 million. The cash proceeds from the sale were $25 million. The gain on the sale was $2 million. |
2. | The company did not issue any new bonds during the year. |
3. | The company paid a cash dividend during the year. |
4. | 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. Amounts to be deducted and negative amounts should be indicated with a minus sign.) |
Blankley Company Statement of Cash Flows | ||
Operating activities: | ||
$ | ||
Adjustments to convert net income to cash basis: | ||
$ | ||
| | |
Net cash operating activities | ||
Investing activities: | ||
| ||
Net cash investing activities | ||
Financing activities: | ||
| ||
Net cash financing activities | ||
| ||
Cash balance, beginning of year | ||
| ||
Cash balance, end of year | $ | |
| ||
|
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