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Problem 12-12A Prepare a Statement of Cash Flows [LO12-1, LO12-2] A comparative balance sheet and an income statement for Burgess Company are given below: Burgess

Problem 12-12A Prepare a Statement of Cash Flows [LO12-1, LO12-2]

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 $ 59 $ 121
Accounts receivable 840 768
Inventory 750 690
Total current assets 1,649 1,579
Property, plant, and equipment 1,705 1,664
Less accumulated depreciation 890 711
Net property,plant, and equipment 815 953
Total assets $ 2,464 $ 2,532
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 300 $ 180
Accrued liabilities 200 150
Income taxes payable 117 92
Total current liabilities 617 422
Bonds payable 515 800
Total liabilities 1,132 1,222
Stockholders' equity:
Common stock 245 245
Retained earnings 1,087 1,065
Total stockholders' equity 1,332 1,310
Total liabilities and stockholders' equity $ 2,464 $ 2,532

Burgess Company Income Statement (dollars in millions)
Sales $ 4,300
Cost of goods sold 2,940
Gross margin 1,360
Selling and administrative expenses 920
Net operating income 440
Nonoperating items: Gain on sale of equipment 2
Income before taxes 442
Income taxes 152
Net income $ 290

Burgess also provided the following information:

1.

The company sold equipment that had an original cost of $52 million and accumulated depreciation of $27 million. The cash proceeds from the sale were $27 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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