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The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $82 million. SURMISE COMPANY Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment. Less: Accumulated depreciation Patent Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings 2024 $ 52 90 (24) 18 138 81 102 409 (140) 26 $ 752 $ 20 2 50 125 66 70 263 156 $ 752 2023 $ 56 108 (3) 17 115 40 102 275 (110) 28 $ 628 $ 44 21 0 0 136 50 205 172 $ 628 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.

The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $82 million. SURMISE COMPANY Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) Assets Cash Accounts receivable Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment. Less: Accumulated depreciation Patent Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings 2024 $ 52 90 (24) 18 138 81 102 409 (140) 26 $ 752 $ 20 2 50 125 66 70 263 156 $ 752 2023 $ 56 108 (3) 17 115 40 102 275 (110) 28 $ 628 $ 44 21 0 0 136 50 205 172 $ 628 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2024 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Depreciation expense Bad debt expense Amortization expense Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in prepaid expenses Decrease in accrued liabilities Net cash flows from operating activities Cash flows from investing activities: Purchase of long-term investment Net cash flows from investing activities Cash flows from financing activities: Payment of lease liability Issuance of notes payable Retirement of bonds payable Sale of common stock Payment of dividends Show Transcribed Text Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities: Acquired use of buildings by lease $ $ 0 0 0
Transcribed Image Text:SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2024 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Depreciation expense Bad debt expense Amortization expense Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in prepaid expenses Decrease in accrued liabilities Net cash flows from operating activities Cash flows from investing activities: Purchase of long-term investment Net cash flows from investing activities Cash flows from financing activities: Payment of lease liability Issuance of notes payable Retirement of bonds payable Sale of common stock Payment of dividends Show Transcribed Text Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities: Acquired use of buildings by lease $ $ 0 0 0
The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $82 million. SURMISE COMPANY Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) Assets Cash Accounts receivable. Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings 2024 $ 52 90 (24) 18 138 81 102 409 (140) 26 $ 752 $ 20 2 50 125 66 70 263 156 $ 752 2023 $ 56 108 (3) 17 115 40 102 275 (110) 28 $ 628 $ 44 21 0 136 50 205 172 $ 628 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.
Transcribed Image Text:The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $82 million. SURMISE COMPANY Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) Assets Cash Accounts receivable. Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings 2024 $ 52 90 (24) 18 138 81 102 409 (140) 26 $ 752 $ 20 2 50 125 66 70 263 156 $ 752 2023 $ 56 108 (3) 17 115 40 102 275 (110) 28 $ 628 $ 44 21 0 136 50 205 172 $ 628 Required: Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. Use the indirect method to present cash flows from operating activities because you do not have sufficient information to use the direct method. You will need to make reasonable assumptions concerning the reasons for changes in some account balances. A spreadsheet or T-account analysis will be helpful. (Hint: The right to use a building was acquired with a seven-year lease agreement. Annual lease payments of $9 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.
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