Chapter 13, Problem 12P

Prepare a Statement of Cash Flows
A comparative balance sheet and an income statement for Burgess Company are given below:

Burgess also provided the following information:
1. The company sold equipment that had an original cost of S13 million and accumulated depreciation of $8 million. The cash proceeds from the sale were $8 million. The gain on the sale was $3 million.
2. The company did not issue any new bonds during" the year.
3. The company paid a cash dividend during the year.
4. 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.
2. Assume that Burgess had sales of $3,800 net income of $135, and net cash provided by operating activities of $150 in the prior year (all numbers are stated in millions). Prepare a memo that summarizes your interpretations of Burgess's financial performance