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	$	52		$	107
Accounts receivable		770			705
Inventory		715			662
Total current assets		1,537			1,474
Property, plant, and equipment		1,635			1,601
Less accumulated depreciation		848			690
Net property, plant, and equipment		787			911
Total assets	$	2,324		$	2,385
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	286		$	173
Accrued liabilities		193			157
Income taxes payable		103			85
Total current liabilities		582			415
Bonds payable		480			730
Total liabilities		1,062			1,145
Stockholders' equity:
Common stock		210			210
Retained earnings		1,052			1,030
Total stockholders' equity		1,262			1,240
Total liabilities and stockholders' equity	$	2,324		$	2,385

Burgess Company Income Statement (dollars in millions)
Sales	$	4,090
Cost of goods sold		2,800
Gross margin		1,290
Selling and administrative expenses		906
Net operating income		384
Nonoperating items:
Gain on sale of equipment		2
Income before taxes		386
Income taxes		138
Net income	$	248

Burgess also provided the following information:

1. The company sold equipment that had an original cost of $38 million and accumulated depreciation of $20 million. The cash proceeds from the sale were $20 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.)