In: Accounting
A comparative balance sheet and an income statement for Burgess Company are given below:
Burgess Company Comparative Balance Sheet (dollars in millions) |
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Ending Balance | Beginning Balance | ||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 48 | $ | 99 | |
Accounts receivable | 730 | 669 | |||
Inventory | 695 | 646 | |||
Total current assets | 1,473 | 1,414 | |||
Property, plant, and equipment | 1,595 | 1,565 | |||
Less accumulated depreciation | 824 | 678 | |||
Net property, plant, and equipment | 771 | 887 | |||
Total assets | $ | 2,244 | $ | 2,301 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 278 | $ | 169 | |
Accrued liabilities | 189 | 161 | |||
Income taxes payable | 95 | 81 | |||
Total current liabilities | 562 | 411 | |||
Bonds payable | 460 | 690 | |||
Total liabilities | 1,022 | 1,101 | |||
Stockholders' equity: | |||||
Common stock | 190 | 190 | |||
Retained earnings | 1,032 | 1,010 | |||
Total stockholders' equity | 1,222 | 1,200 | |||
Total liabilities and stockholders' equity | $ | 2,244 | $ | 2,301 | |
Burgess Company Income Statement (dollars in millions) |
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Sales | $ | 3,970 |
Cost of goods sold | 2,720 | |
Gross margin | 1,250 | |
Selling and administrative expenses | 898 | |
Net operating income | 352 | |
Nonoperating items: | ||
Gain on sale of equipment | 2 | |
Income before taxes | 354 | |
Income taxes | 130 | |
Net income | $ | 224 |
Burgess also provided the following information:
The company did not issue any new bonds during the year.
The company paid a cash dividend during the year.
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.)