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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
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 | $ | 48 | $ | 99 |
Accounts receivable | 730 | 669 | ||
Inventory | 695 | 646 | ||
Total current assets | 1,473 | 1,414 | ||
Property, plant, and equipment | 1,595 | 1,565 | ||
Less accumulated depreciation | 824 | 678 | ||
Net property,plant, and equipment | 771 | 887 | ||
Total assets | $ | 2,244 | $ | 2,301 |
Liabilities and Stockholders' Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 278 | $ | 169 |
Accrued liabilities | 189 | 161 | ||
Income taxes payable | 95 | 81 | ||
Total current liabilities | 562 | 411 | ||
Bonds payable | 460 | 690 | ||
Total liabilities | 1,022 | 1,101 | ||
Stockholders' equity: | ||||
Common stock | 190 | 190 | ||
Retained earnings | 1,032 | 1,010 | ||
Total stockholders' equity | 1,222 | 1,200 | ||
Total liabilities and stockholders' equity | $ | 2,244 | $ | 2,301 |
Burgess Company Income Statement (dollars in millions) | ||
Sales | $ | 3,970 |
Cost of goods sold | 2,720 | |
Gross margin | 1,250 | |
Selling and administrative expenses | 898 | |
Net operating income | 352 | |
Nonoperating items: Gain on sale of equipment | 2 | |
Income before taxes | 354 | |
Income taxes | 130 | |
Net income | $ | 224 |
Burgess also provided the following information: |
1. | The company sold equipment that had an original cost of $30 million and accumulated depreciation of $16 million. The cash proceeds from the sale were $16 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 . List any deduction in cash and cash outflows as negative amounts.)
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