The comparative balance sheets for 2013 and 2012 are given below for Surmise Company. Net income for 2013 was $72 million.
SURMISE COMPANY
Comparative Balance Sheets
December 31, 2013 and 2012
($ in millions) |
|
2013 |
2012 |
| Assets |
|
|
|
|
| Cash |
$ |
107 |
$ |
58 |
| Accounts receivable |
|
85 |
|
98 |
| Less: Allowance for uncollectible accounts |
|
(19) |
|
(3) |
| Prepaid expenses |
|
13 |
|
12 |
| Inventory |
|
143 |
|
125 |
| Long-term investment |
|
110 |
|
75 |
| Land |
|
90 |
|
90 |
| Buildings and equipment |
|
360 |
|
250 |
| Less: Accumulated depreciation |
|
(125) |
|
(100) |
| Patent |
|
21 |
|
24 |
|
|
|
|
|
|
$ |
785 |
$ |
629 |
|
|
|
|
|
| Liabilities |
|
|
|
|
| Accounts payable |
$ |
19 |
$ |
34 |
| Accrued liabilities |
|
(4) |
|
16 |
| Notes payable |
|
40 |
|
0 |
| Lease liability |
|
110 |
|
0 |
| Bonds payable |
|
60 |
|
120 |
| Shareholders' Equity |
|
|
|
|
| Common stock |
|
65 |
|
50 |
| Paid-in capital-excess of par |
|
261 |
|
205 |
| Retained earnings |
|
234 |
|
204 |
|
|
|
|
|
|
$ |
785 |
$ |
629 |
|
|
|
|
|
|
| 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.)
|