Problem 13-12 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	$	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:

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.)