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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 | $ | 62 | $ | 127 |
Accounts receivable | 870 | 795 | ||
Inventory | 765 | 702 | ||
Total current assets | 1,697 | 1,624 | ||
Property, plant, and equipment | 1,735 | 1,691 | ||
Less accumulated depreciation | 908 | 720 | ||
Net property,plant, and equipment | 827 | 971 | ||
Total assets | $ | 2,524 | $ | 2,595 |
Liabilities and Stockholders' Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 306 | $ | 183 |
Accrued liabilities | 203 | 147 | ||
Income taxes payable | 123 | 95 | ||
Total current liabilities | 632 | 425 | ||
Bonds payable | 530 | 830 | ||
Total liabilities | 1,162 | 1,255 | ||
Stockholders' equity: | ||||
Common stock | 260 | 260 | ||
Retained earnings | 1,102 | 1,080 | ||
Total stockholders' equity | 1,362 | 1,340 | ||
Total liabilities and stockholders' equity | $ | 2,524 | $ | 2,595 |
Burgess Company Income Statement (dollars in millions) | ||
Sales | $ | 4,390 |
Cost of goods sold | 3,000 | |
Gross margin | 1,390 | |
Selling and administrative expenses | 926 | |
Net operating income | 464 | |
Nonoperating items: Gain on sale of equipment | 2 | |
Income before taxes | 466 | |
Income taxes | 158 | |
Net income | $ | 308 |
Burgess also provided the following information: |
1. | The company sold equipment that had an original cost of $58 million and accumulated depreciation of $30 million. The cash proceeds from the sale were $30 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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