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The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income...

The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $66 million.

SURMISE COMPANY
Comparative Balance Sheets
December 31, 2018 and 2017
($ in millions)
2018 2017
Assets
Cash $ 45 $ 49
Accounts receivable 82 92
Less: Allowance for uncollectible accounts (18 ) (5 )
Prepaid expenses 13 9
Inventory 135 120
Long-term investment 92 60
Land 84 84
Buildings and equipment 344 235
Less: Accumulated depreciation (115 ) (94 )
Patent 18 21
$ 680 $ 571
Liabilities
Accounts payable $ 11 $ 27
Accrued liabilities 2 13
Notes payable 34 0
Lease liability 101 0
Bonds payable 57 111
Shareholders’ Equity
Common stock 62 50
Paid-in capital—excess of par 255 205
Retained earnings 158 165
$ 680 $ 571


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 helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $8 million are 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 to be deducted should be indicated with a minus sign.)

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