Question

A comparative balance sheet and an income statement for BurgessCompany are given below:

Burgess Company Comparative Balance Sheet (dollars in millions)
	Ending Balance			Beginning Balance
Assets
Current assets:
Cash and cash equivalents	$	51		$	105
Accounts receivable		760			696
Inventory		710			658
Total current assets		1,521			1,459
Property, plant, andequipment		1,625			1,592
Less accumulateddepreciation		842			687
Net property,plant, andequipment		783			905
Total assets	$	2,304		$	2,364
Liabilities andStockholders' Equity
Current liabilities:
Accounts payable	$	284		$	172
Accrued liabilities		192			158
Income taxes payable		101			84
Total current liabilities		577			414
Bonds payable		475			720
Total liabilities		1,052			1,134
Stockholders' equity:
Common stock		205			205
Retained earnings		1,047			1,025
Total stockholders' equity		1,252			1,230
Total liabilities andstockholders' equity	$	2,304		$	2,364

Burgess Company Income Statement (dollars in millions)
Sales	$	4,060
Cost of goods sold		2,780
Gross margin		1,280
Selling and administrativeexpenses		904
Net operating income		376
Nonoperating items:
Gain on sale of equipment		2
Income before taxes		378
Income taxes		136
Net income	$	242

Burgess also provided the following information:

The company sold equipment that had an original cost of $36million and accumulated depreciation of $19 million. The cashproceeds from the sale were $19 million. The gain on the sale was$2 million.

The company did not issue any new bonds during the year.

The company paid a cash dividend during the year.

The company did not complete any common stock transactionsduring the year.