The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $74 milion SURNISE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2018 2017 Assets Cash Accounts receivable $27 $ 35 86 100 Less: Allowance for uncollectible accounts (19) 2) Prepaid expenses Inventory Long-term investment Land Buildings and equipment 13 129 110 80 92 377255 15 116 92 (128) (102) Lessr Accumulated depreciation Patent 23 $ 717 $ 604 Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders Equity s 16 $ 36 42 1 113 61 123 - Required i Saved Comparative Balance Sheets December 31, 2018 and 2017 ( in millions) 2018 2017 Assets Cash Accounts receivable $ 27 35 100 Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment 86 (19) 15 129 116 92 377 (2) 13 110 80 92 255 Less: Accumulated depreciation Patent (128) (102) 2223 $717 604 Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings $ 16 36 17 2 42 113 61 123 255 162 50 205 173 $ 717 604 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31,. 2018. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be paid at January 1 of each year starting in 2018.) (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are to be deducted should be Indicated with a minus sign.) SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2018 (S in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: 74 26 17 Bad debt expense Patent amortization expense SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2018 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: 74 Depreciation expense Bad debt expense Patent amortization expense 26 17 Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in prepaid expenses Decrease in accrued liabilities 14 (19) (20) (15) Net cash flows from operating activities 76 Cash flows from investing activities: Purchase of long-term investment (36) Net cash flows from investing activities (36) Cash flows from financing activities: Payment of lease liability Issuance of note payable Retirement of bonds payable Sale of common stock Payment of cash dividends 113 42 (62) Net cash flows from financing activities 93 Net decrease in cash Cash flows from financing activities: Payment of lease liability Issuance of note payable Retirement of bonds payable Sale of common stock Payment of cash dividends 113 42 (62) Net cash flows from financing activities 93 Net decrease in cash Cash balance, December 31 0 Noncash investing and financing activities: Cash balance, January 1
