Effects of Burger King€™s Current Liabilities on Its Statement of Cash Flows The following items are classified as current liabilities on Burger King Holdings, Inc.€™s balance sheets as of June 30, 2008, and June 30, 2007:

Required
1. Burger King uses the indirect method to prepare its statement of cash flows. Prepare the Operating Activities section of the cash flow statement, which indicates how each item will be reflected as an adjustment to net income. If you did not include any of the preceding items, explain why.
2. How would you decide if Burger King has the ability to pay these liabilities as they becomedue?

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As of June 30, 2008 2007 (in millions) Current liabilities: Accounts and drafts payable Accrued advertising Other accrued liabilities Current portion of long-term debt and capital leases $130 $106 64 259 5 $456 $434 242 Total current liabilities