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) Assets Current assets: Cash and cash equivalents Accounts receivable Inventory Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Burgess Company Income Statement Ending Balance $ 48 730 695 1,473 1,595 824 771 $ 2,244 $ 278 189 95 562 460 1,022 190 1,032 1,222 $ 2,244 Beginning Balance $ 99 669 646 1,414 1,565 678 887 $ 2,301 $ 169 161 81 411 690 1,101 190 1,010 1,200 $ 2,301 Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Burgess Company Income Statement (dollars in millions) Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment Income before taxes Income taxes Net income Burgess also provided the following information: $ 3,970 2,720 1,250 898 352 2 354 130 $ 224 1,032 1,222 $ 2,244 1,010 1,200 $ 2,301 1. The company sold equipment that had an original cost of $30 million and accumulated depreciation of $16 million. The cash proceeds from the sale were $16 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.) 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.) Operating activities: Net income Adjustments to convert net income to a cash basis: Depreciation Increase in accounts receivable Increase in inventory Increase in accounts payable Increase in accrued liabilities Increase in income taxes payable Gain on sale of equipment Burgess Company Statement of Cash Flows Net cash provided by operating activities Investing activities: Proceeds from sale of equipment Additions to property, plant, and equipment Financing activities: Retirement of bonds payable Cash dividends paid $ 162 (2) $ 224 160 384 0 Increase in inventory Increase in accounts payable Increase in accrued liabilities Increase in income taxes payable Gain on sale of equipment Net cash provided by operating activities Investing activities: Proceeds from sale of equipment Additions to property, plant, and equipment Financing activities: Retirement of bonds payable Cash dividends paid Net cash provided by financing activities Net decrease in cash Beginning cash and cash equivalents Ending cash and cash equivalents $ 160 384 0 0 384 384
