Solution-Prepare the statement of cash flows of surmise

Prepare the statement of cash flows of surmise company

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Reference no: EM131763821

Question - The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $64 million.

SURMISE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	2018	2017
Assets
Cash	$38	$41
Accounts receivable	81	90
Less: Allowances for uncollectible accounts	(14)	(2)
Prepaid expenses	10	8
Inventory	149	135
Long-term investment	86	55
Land	82	82
Building and equipment	338	230
Less: Accumulated depreciation	(112)	(92)
Patent	17	19
	$675	$566
Liabilities
Accounts payable	$10	$25
Accrued liabilities	4	12
Notes payable	32	0
Lease liabilities	98	0
Bonds payable	56	108
Shareholders' Equity
Common stock	61	50
Paid in capital excess of par	253	205
Retained earnings	161	166
	$675	$566

Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2018. 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 $10 million are paid at January 1 of each year starting in 2018.)

Reference no: EM131763821

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Prepare the statement of cash flows of surmise company

Reference no: EM131763821

Reference no: EM131763821

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