70.2K

Verified Solution

Link Copied!

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	$ 62	$ 127
Accounts receivable	870	795
Inventory	765	702
Total current assets	1,697	1,624
Property, plant, and equipment	1,735	1,691
Less accumulated depreciation	908	720
Net property,plant, and equipment	827	971
Total assets	$ 2,524	$ 2,595
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 306	$ 183
Accrued liabilities	203	147
Income taxes payable	123	95
Total current liabilities	632	425
Bonds payable	530	830
Total liabilities	1,162	1,255
Stockholders' equity:
Common stock	260	260
Retained earnings	1,102	1,080
Total stockholders' equity	1,362	1,340
Total liabilities and stockholders' equity	$ 2,524	$ 2,595

Burgess Company Income Statement (dollars in millions)
Sales	$ 4,390
Cost of goods sold	3,000
Gross margin	1,390
Selling and administrative expenses	926
Net operating income	464
Nonoperating items:
Gain on sale of equipment	2
Income before taxes	466
Income taxes	158
Net income	$ 308

Burgess also provided the following information:

1. The company sold equipment that had an original cost of $58 million and accumulated depreciation of $30 million. The cash proceeds from the sale were $30 million. The gain on the sale was $2 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:

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.)

Answer & Explanation Solved by verified expert

See Answer