Question
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 | $ | 68 | $ | 139 | |
Accounts receivable | 930 | 849 | |||
Inventory | 795 | 726 | |||
Total current assets | 1,793 | 1,714 | |||
Property, plant, and equipment | 1,795 | 1,745 | |||
Less accumulated depreciation | 944 | 738 | |||
Net property,plant, and equipment | 851 | 1,007 | |||
Total assets | $ | 2,644 | $ | 2,721 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 318 | $ | 189 | |
Accrued liabilities | 209 | 141 | |||
Income taxes payable | 135 | 101 | |||
Total current liabilities | 662 | 431 | |||
Bonds payable | 560 | 890 | |||
Total liabilities | 1,222 | 1,321 | |||
Stockholders' equity: | |||||
Common stock | 290 | 290 | |||
Retained earnings | 1,132 | 1,110 | |||
Total stockholders' equity | 1,422 | 1,400 | |||
Total liabilities and stockholders' equity | $ | 2,644 | $ | 2,721 | |
Burgess Company Income Statement (dollars in millions) | ||
Sales | $ | 4,570 |
Cost of goods sold | 3,120 | |
Gross margin | 1,450 | |
Selling and administrative expenses | 938 | |
Net operating income | 512 | |
Nonoperating items: | ||
Gain on sale of equipment | 2 | |
Income before taxes | 514 | |
Income taxes | 170 | |
Net income | $ | 344 |
Burgess also provided the following information:
The company sold equipment that had an original cost of $70 million and accumulated depreciation of $36 million. The cash proceeds from the sale were $36 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:
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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