The comparative balance sheets for 2021 and 2020 are given below for Surmise Company. Net income for 2021 was $62 million SURMISE COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent $ 46 556 80 88 (14) (3) 87 138 125 50 BO (109) (90 9 $ 23 Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings 95 55 105 251 150 50 205 160 Shareholders Equity Common stock Paid in capital-excess of par Retained earnings 6050 251 205 150169 $ 653 $ 554 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2021. 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 helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2021.) (Enter your answers in millions (.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.) SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities Cash flows from investing activities: Cash flows from investing activities Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities: The comparative balance sheets for 2021 and 2020 are given below for Surmise Company. Net income for 2021 was $62 million SURMISE COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent $ 46 556 80 88 (14) (3) 87 138 125 50 BO (109) (90 9 $ 23 Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings 95 55 105 251 150 50 205 160 Shareholders Equity Common stock Paid in capital-excess of par Retained earnings 6050 251 205 150169 $ 653 $ 554 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2021. 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 helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2021.) (Enter your answers in millions (.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.) SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities Cash flows from investing activities: Cash flows from investing activities Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities
