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 $9 million are paid at January 1 of each year starting in 2024.) Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 75E
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Transcribed Image Text:SURMISE COMPANY
Statement of Cash Flows
For year ended December 31, 2024
($ 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
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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