Chapter 13 Q 5

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	$	60		$	123
Accounts receivable		850			777
Inventory		755			694
Total current assets		1,665			1,594
Property, plant, and equipment		1,715			1,673
Less accumulated depreciation		896			714
Net property, plant, and equipment		819			959
Total assets	$	2,484		$	2,553
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	302		$	181
Accrued liabilities		201			149
Income taxes payable		119			93
Total current liabilities		622			423
Bonds payable		520			810
Total liabilities		1,142			1,233
Stockholders' equity:
Common stock		250			250
Retained earnings		1,092			1,070
Total stockholders' equity		1,342			1,320
Total liabilities and stockholders' equity	$	2,484		$	2,553

Burgess Company Income Statement (dollars in millions)
Sales	$	4,330
Cost of goods sold		2,960
Gross margin		1,370
Selling and administrative expenses		922
Net operating income		448
Nonoperating items:
Gain on sale of equipment		2
Income before taxes		450
Income taxes		154
Net income	$	296

Burgess also provided the following information:

1. The company sold equipment that had an original cost of $54 million and accumulated depreciation of $28 million. The cash proceeds from the sale were $28 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:

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.)