Question
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
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.)
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