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	$ 65	$ 133
Accounts receivable	900	822
Inventory	780	714
Total current assets	1,745	1,669
Property, plant, and equipment	1,765	1,718
Less accumulated depreciation	926	729
Net property,plant, and equipment	839	989
Total assets	$ 2,584	$ 2,658
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 312	$ 186
Accrued liabilities	206	144
Income taxes payable	129	98
Total current liabilities	647	428
Bonds payable	545	860
Total liabilities	1,192	1,288
Stockholders' equity:
Common stock	275	275
Retained earnings	1,117	1,095
Total stockholders' equity	1,392	1,370
Total liabilities and stockholders' equity	$ 2,584	$ 2,658

Burgess Company Income Statement (dollars in millions)
Sales	$ 4,480
Cost of goods sold	3,060
Gross margin	1,420
Selling and administrative expenses	932
Net operating income	488
Nonoperating items:
Gain on sale of equipment	2
Income before taxes	490
Income taxes	164
Net income	$ 326

Burgess also provided the following information:

1. The company sold equipment that had an original cost of $64 million and accumulated depreciation of $33 million. The cash proceeds from the sale were $33 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.)

statement of cash flows chart

Please show work for equations for better understanding.