The comparative balance sheets for 2013 and 2012 are given below for Surmise Company. Net income for 2013 was $86 million. SURMISE COMPANY
| The comparative balance sheets for 2013 and 2012 are given below for Surmise Company. Net income for 2013 was $86 million. |
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SURMISE COMPANY Comparative Balance Sheets December 31, 2013 and 2012 ($ in millions) | ||||
| 2013 | 2012 | |||
| Assets | ||||
| Cash | $ | 88 | $ | 38 |
| Accounts receivable | 93 | 113 | ||
| Less: Allowance for uncollectible accounts | (28) | (5) | ||
| Prepaid expenses | 23 | 19 | ||
| Inventory | 130 | 105 | ||
| Long-term investment | 153 | 110 | ||
| Land | 106 | 106 | ||
| Buildings and equipment | 416 | 285 | ||
| Less: Accumulated depreciation | (146) | (114) | ||
| Patent | 28 | 29 | ||
| $ | 863 | $ | 686 | |
| Liabilities | ||||
| Accounts payable | $ | 26 | $ | 48 |
| Accrued liabilities | (3) | 23 | ||
| Notes payable | 54 | 0 | ||
| Lease liability | 131 | 0 | ||
| Bonds payable | 68 | 142 | ||
| Shareholders’ Equity | ||||
| Common stock | 72 | 50 | ||
| Paid-in capital—excess of par | 267 | 205 | ||
| Retained earnings | 248 | 218 | ||
| $ | 863 | $ | 686 | |
| Required: |
| Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2013. 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. (Enter your answers in millions.Amounts to be deducted should be indicated with a minus sign.) |
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SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2013 ($ in millions) | ||
| Cash flows from operating activities: | ||
| Net income | $ | |
| Adjustments for noncash effects: | ||
| (Click to select) Loss on sale of land Bad debt expense Gain on sale of building Patent amortization expense Gain on sale of land Loss on sale of building Depreciation expense | ||
| (Click to select) Gain on sale of building Patent amortization expense Depreciation expense Gain on sale of land Loss on sale of building Bad debt expense Loss on sale of land | ||
| (Click to select) Gain on sale of land Bad debt expense Gain on sale of building Depreciation expense Loss on sale of building Patent amortization expense Loss on sale of land | ||
| Changes in operating assets and liabilities: | ||
| (Click to select) Increase in inventory Decrease in inventory Increase in prepaid expenses Decrease in accrued liabilities Decrease in accounts receivable Increase in acounts payable Decrease in accounts payable | ||
| (Click to select) Increase in inventory Decrease in accounts payable Decrease in accrued liabilities Decrease in accounts receivable Increase in acounts payable Increase in prepaid expenses Decrease in inventory | ||
| (Click to select) Decrease in accrued liabilities Increase in prepaid expenses Decrease in accounts receivable Decrease in accounts payable Decrease in inventory Increase in acounts payable Increase in inventory | ||
| (Click to select) Increase in acounts payable Decrease in accrued liabilities Increase in prepaid expenses Decrease in inventory Increase in inventory Decrease in accounts payable Decrease in accounts receivable | ||
| (Click to select) Decrease in accrued liabilities Increase in prepaid expenses Increase in inventory Decrease in inventory Decrease in accounts receivable Increase in acounts payable Decrease in accounts payable | ||
| Net cash flows from operating activities | $ | |
| Cash flows from investing activities: | ||
| (Click to select) Sale of land Purchase of land Purchase of building Purchase of long – term investment Sale of equipment Issuance of note payable Purchase of short – term investment | ||
| Net cash flows from investing activities | ||
| Cash flows from financing activities: | ||
| (Click to select) Payments on long – term debt Payment of cash dividends Sale of common stock Sale of bonds payable Retirement of bonds payable Issuance of bonds payable Issuance of note payable | ||
| (Click to select) Sale of bonds payable Retirement of bonds payable Payment of cash dividends Issuance of bonds payable Payments on long – term debt Issuance of note payable Sale of common stock | ||
| (Click to select) Payments on long – term debt Retirement of bonds payable Sale of bonds payable Payment of cash dividends Issuance of bonds payable Sale of common stock Issuance of note payable | ||
| (Click to select) Sale of bonds payable Payment of cash dividends Issuance of bonds payable Retirement of bonds payable Payments on long – term debt Sale of common stock Issuance of note payable | ||
| Net cash flows from financing activities | ||
| (Click to select) Net decrease in cash Net increase in cash | ||
| Cash balance, January 1 | $ | |
| Cash balance, December 31 | $ | |
