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	$ 54	$ 111
Accounts receivable	790	723
Inventory	725	670
Total current assets	1,569	1,504
Property, plant, and equipment	1,655	1,619
Less accumulated depreciation	860	696
Net property,plant, and equipment	795	923
Total assets	$ 2,364	$ 2,427
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 290	$ 175
Accrued liabilities	195	155
Income taxes payable	107	87
Total current liabilities	592	417
Bonds payable	490	750
Total liabilities	1,082	1,167
Stockholders' equity:
Common stock	220	220
Retained earnings	1,062	1,040
Total stockholders' equity	1,282	1,260
Total liabilities and stockholders' equity	$ 2,364	$ 2,427

Burgess Company Income Statement (dollars in millions)
Sales	$ 4,150
Cost of goods sold	2,840
Gross margin	1,310
Selling and administrative expenses	910
Net operating income	400
Nonoperating items:
Gain on sale of equipment	2
Income before taxes	402
Income taxes	142
Net income	$ 260

Burgess also provided the following information:

1. The company sold equipment that had an original cost of $42 million and accumulated depreciation of $22 million. The cash proceeds from the sale were $22 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.)

Answer is complete but not entirely correct.

Burgess Company
Statement of Cash Flows
Operating activities:
Investing activities:
Financing activities:
not attempted	not attempted
Beginning cash and cash equivalents		260 selected answer incorrect
Ending cash and cash equivalents