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 | $ | 49 | $ | 79 | |
Accounts receivable | 645 | 580 | |||
Inventory | 660 | 615 | |||
Total current assets | 1,354 | 1,274 | |||
Property, plant, and equipment | 1,515 | 1,466 | |||
Less accumulated depreciation | 765 | 641 | |||
Net property, plant, and equipment | 750 | 825 | |||
Total assets | $ | 2,104 | $ | 2,099 | |
Liabilities and Stockholders' Equity | |||||
Current liabilities: | |||||
Accounts payable | $ | 250 | $ | 155 | |
Accrued liabilities | 190 | 165 | |||
Income taxes payable | 76 | 70 | |||
Total current liabilities | 516 | 390 | |||
Bonds payable | 450 | 620 | |||
Total liabilities | 966 | 1,010 | |||
Stockholders' equity: | |||||
Common stock | 161 | 161 | |||
Retained earnings | 977 | 928 | |||
Total stockholders' equity | 1,138 | 1,089 | |||
Total liabilities and stockholders' equity | $ | 2,104 | $ | 2,099 | |
Burgess Company Income Statement (dollars in millions) |
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Sales | $ | 3,600 |
Cost of goods sold | 2,550 | |
Gross margin | 1,050 | |
Selling and administrative expenses | 875 | |
Net operating income | 175 | |
Nonoperating items: | ||
Gain on sale of equipment | 3 | |
Income before taxes | 178 | |
Income taxes | 63 | |
Net income | $ | 115 |
Burgess also provided the following information:
The company sold equipment that had an original cost of $13 million and accumulated depreciation of $8 million. The cash proceeds from the sale were $8 million. The gain on the sale was $3 million.
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:
1. 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.)