Problem 13-12 (Algo) Prepare a Statement of Cash Flows [LO13-1, LO13-2]

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	$ 41	$ 85
Accounts receivable	660	606
Inventory	660	618
Total current assets	1,361	1,309
Property, plant, and equipment	1,525	1,502
Less accumulated depreciation	782	657
Net property,plant, and equipment	743	845
Total assets	$ 2,104	$ 2,154
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 264	$ 162
Accrued liabilities	182	168
Income taxes payable	81	74
Total current liabilities	527	404
Bonds payable	425	620
Total liabilities	952	1,024
Stockholders' equity:
Common stock	155	155
Retained earnings	997	975
Total stockholders' equity	1,152	1,130
Total liabilities and stockholders' equity	$ 2,104	$ 2,154

Burgess Company Income Statement (dollars in millions)
Sales	$ 3,760
Cost of goods sold	2,580
Gross margin	1,180
Selling and administrative expenses	884
Net operating income	296
Nonoperating items:
Gain on sale of equipment	2
Income before taxes	298
Income taxes	116
Net income	$ 182

Burgess also provided the following information:

1. The company sold equipment that had an original cost of $16 million and accumulated depreciation of $9 million. The cash proceeds from the sale were $9 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.)

Burgess Company
Statement of Cash Flows
Operating activities:
Investing activities:
Financing activities:
Beginning cash and cash equivalents
Ending cash and cash equivalents