Question

5 Problem 14-12 Prepare a Statement of Cash Flows [LO14-1, LO14-2] 2 A comparative balance sheet and an income statement for Burgess Company are glven below: points Burgess Company Comparative Balance Sheet (dollars in millions) Ending Beginning Balance еВook Balance Assets Current assets Print Cash and cash equivalents Accounts receivable 46 95 710 651 685 638 Inventory 1,441 1,384 Reference Total current assets Property, plant, and equipment Less accumulated depreciation Net property ,plant, and equipment 1,575 812 1,547 672 763 875 $2,204 $ 2,259 Total asets Liabilities and Stockholders Equity Current liabilities Accounts payable Accrued l1iabilities 274 167 187 163 91 79 Income taxes payable Total current 1iabilities 552 409 Bonds payable 450 670 1.002 1,079 Total liabilities Stockholders' equity Common stock 180 180 1,022 1,202 1,000 1,180 Retained earnings Total stockholders equity Total liabilities and $2,204 2,259 stockholders equity Burgess Company Income Statement (dollars in millions) Sales $3,910 2,680 1,230 Cost of goods sold Gross margin Selling and administrative expenses 894 Net operating income Nonoperating items Gain on sale of equipment 336 2 Income before taxes 338 126 Income tахes 212 Net income Burgess also provided the following information: 1. The company sold equipment that had an original cost of $26 million and accumulated depreclation of $14 million. The cash proceeds from the sale were $14 million. The gain on the sale was $2 million. 2. The company did not issue any new bonds during the year 3. The company pald a cash dvidend during the year 4. The company did not complete any common stock transactions during the year LO

Answer 1

Answer-

BURGESS COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED
Particulars		Amount
		$ in millions
Cash flow from operating activities
Net Income		212
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		154
Gain on sale of equipment		-2
Change in operating assets & liabilities
Increase in accounts receivable		-59
Increase in inventory		-47
Increase in accounts payable		107
Increase in accrued liabilities		24
Increase in income taxes payable		12
Net cash flow from operating activities (a)		401
Cash Flow from Investing activities
New equipment purchased		-54
Old equipment sold		14
Net cash Flow from Investing activities (b)		-40
Cash Flow from Financing activities
Cash dividends paid	($1000+$212-$1022)	-190
Bonds payable paid		-220
Net cash Flow from Financing activities (c)		-410
Net Change in cash c=a+b+c		-49
Beginning cash balance		95
Closing cash balance		46