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In: Accounting

A comparative balance sheet and an income statement for Burgess Company are given below: Burgess Company...

A comparative balance sheet and an income statement for Burgess Company are given below:

Burgess Company
Comparative Balance Sheet
(dollars in millions)
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)
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.)

Solutions

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