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Problem 15-12 (Algo) Prepare a Statement of Cash Flows [LO15-1, LO15-2] A comparative balance sheet and an income statement for Burgess Company are given below:

Problem 15-12 (Algo) Prepare a Statement of Cash Flows [LO15-1, LO15-2]

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 $ 68 $ 139
Accounts receivable 930 849
Inventory 795 726
Total current assets 1,793 1,714
Property, plant, and equipment 1,795 1,745
Less accumulated depreciation 944 738
Net property,plant, and equipment 851 1,007
Total assets $ 2,644 $ 2,721
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 318 $ 189
Accrued liabilities 209 141
Income taxes payable 135 101
Total current liabilities 662 431
Bonds payable 560 890
Total liabilities 1,222 1,321
Stockholders' equity:
Common stock 290 290
Retained earnings 1,132 1,110
Total stockholders' equity 1,422 1,400
Total liabilities and stockholders' equity $ 2,644 $ 2,721

Burgess Company Income Statement (dollars in millions)
Sales $ 4,570
Cost of goods sold 3,120
Gross margin 1,450
Selling and administrative expenses 938
Net operating income 512
Nonoperating items:
Gain on sale of equipment 2
Income before taxes 514
Income taxes 170
Net income $ 344

Burgess also provided the following information:

  1. The company sold equipment that had an original cost of $70 million and accumulated depreciation of $36 million. The cash proceeds from the sale were $36 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.)

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