Problem 14-12 Prepare a Statement of Cash Flows [LO14-1, LO14-2]

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	$	42	$	87
Accounts receivable		670		615
Inventory		665		622
Total current assets		1,377		1,324
Property, plant, and equipment		1,535		1,511
Less accumulated depreciation		788		660
Net property,plant, and equipment		747		851
Total assets	$	2,124	$	2,175
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	266	$	163
Accrued liabilities		183		167
Income taxes payable		83		75
Total current liabilities		532		405
Bonds payable		430		630
Total liabilities		962		1,035
Stockholders' equity:
Common stock		160		160
Retained earnings		1,002		980
Total stockholders' equity		1,162		1,140
Total liabilities and stockholders' equity	$	2,124	$	2,175

Burgess Company Income Statement (dollars in millions)
Sales	$	3,790
Cost of goods sold		2,600
Gross margin		1,190
Selling and administrative expenses		886
Net operating income		304
Nonoperating items: Gain on sale of equipment		2
Income before taxes		306
Income taxes		118
Net income	$	188

Burgess also provided the following information:

1.	The company sold equipment that had an original cost of $18 million and accumulated depreciation of $10 million. The cash proceeds from the sale were $10 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:
Adjustments to convert net income to cash basis:
		0
		0
Investing activities:
		0
Financing activities:
		0
		0
Beginning cash and cash equivalents
Ending cash and cash equivalents		$0