Holmes Company reported the following balance sheets at December 31, 20X2 and 20X1:

 

Its income statement for 20X2 was as follows:

($ in millions)
Sales	$ 1,000
Cost of sales	(670)
Depreciation	(30)
Other operating expenses	(100)
Income before taxes	200
Income taxes	(42)
Net income	$ 158

Additional information:

During 20X2, Holmes had the following transactions:

a. Declared and paid a common dividend of $78 million.

b. Purchased additional fixed assets, but did not sell any.

c. Issued $30 million of new debt.

d. Paid interest on all its debt, and included the interest in Other operating expenses.

e. Repurchased common shares, but did not issue any.

Required:

Prepare a cash flow statement for Holmes for 20X2, using the indirect method to present the operating section. Use the worksheet approach described in the appendix to this chapter to construct the cash flow statement.

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December 31, ($ in millions) 20X2 20X1 $ 45 $ 40 Cash Accounts receivable Inventory 170 175 250 230 Fixed assets 500 400 Accumulated depreciation (150) (120) Total assets $ 815 $ 725 $ 100 $ 80 Accounts payable Long-term debt Common stock 455 425 50 50 Retained earnings Treasury stock 280 200 (70) (30) Total liabilities and stockholders' equity $ 815 $ 725