The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income...

Transcribed Image Text:

The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $64 million. SURMISE COMPANY Comparative Balance Sheets. December 31, 2024 and 2023 ($ in millions) Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings Required: 2024 2023 $ 38 $ 41 81 90 (14) (2) 10 8 149 135 86 55 82 82 338 230 (112) (92) 17 19 $ 675 $ 566 $ 10 $ 25 4 12 32 0 98 0 56 108 61 50 253 205 161 166 $ 675 $ 566 Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. 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 $10 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign. SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2024 ($ 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: Net cash flows from investing activities Cash flows from financing activities: The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $64 million. SURMISE COMPANY Comparative Balance Sheets. December 31, 2024 and 2023 ($ in millions) Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings Required: 2024 2023 $ 38 $ 41 81 90 (14) (2) 10 8 149 135 86 55 82 82 338 230 (112) (92) 17 19 $ 675 $ 566 $ 10 $ 25 4 12 32 0 98 0 56 108 61 50 253 205 161 166 $ 675 $ 566 Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. 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 $10 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign. SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2024 ($ 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: Net cash flows from investing activities Cash flows from financing activities: