Problem 12-12A Prepare a Statement of Cash Flows [LO12-1, LO12-2] A comparative

ID: 2401891 • Letter: P

Question

Problem 12-12A Prepare a Statement of Cash Flows [LO12-1, LO12-2] A comparative balance sheet and an income statement for Burgess Company are given below: Burgess Company Comparative Balance Sheet (dollars in millions) Ending Beginning Balance Balance Assets Current assets: Cash and cash equivalents Accounts receivable Inventory $ 68 139 849 795 726 930 Total current assets Property, plant, and equipment Net property,plant, and equipment Total assets 1,793 1,714 1,795 1,745 944 738 Less accumulated depreciation 851 1,007 $ 2,644 S 2,721 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable $ 318 $ 189 141 135 101 209 Total current liabilities Bonds payable 662 560 431 890 Total liabilities 1,222 1,321

Explanation / Answer

Answer:

Burgess Company

Statement of Cash Flows Indirect Method

Amount $

Operating activities:

Net income

344

Adjustments to convert net income to cash basis:

Depreciation (944-738+36)

242

Increase in accounts receivable (849-930)

-81

Increase in inventory(726-795)

-69

Increase in accounts payable (318-189)

129

Decrease in accrued liabilities (209-141)

Increase in income taxes payable (135-101)

Gain on sale of equipment

-2

321

Net cash provided by operating activities

665

investing activity

Proceeds from sale of equipment

Purchase of equipment
(1795-(1745-70)

-120

Net cash provided by Investing activities

-84

Financing activities:

Payment of bonds payable (890-560)

-330

Cash dividends (1100+344-1132)

-322

Net cash provided by financing activities

-652

Net decrease in cash

-71

Beginning cash and cash equivalents

139

Ending cash and cash equivalents