PROBLEM 14-11 Prepare a Statement of Cash Flows (1.01, LO2) A comparative balance sheet and an income statement for Blankley Company are given below: Blankley Company Comparative Balance Sheet (dollars in millions) Ending Balance Beginning Balance Assets Current assets: Cash and cash equivalents. Accounts receivable ... Inventory ... Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Total assets... $ 39 640 650 1,329 1,505 770 735 $2,064 $ 81 588 610 1,279 1,484 651 833 $2,112 $ 160 170 72 Liabilities and Stockholders' Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity. $ 260 180 77 517 415 932 402 600 1,002 145 987 1,132 $2,064 145 965 1.110 $2,112 Blankley Company Income Statement (dollars in millions) Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment Income before taxes. Income taxes Net income $3,700 2,540 1,160 880 280 2 282 112 $ 170 Blankley also provided the following information: 1. The company sold equipment that had an original cost of $12 million and accumulated depre- ciation of $7 million. The cash proceeds from the sale were $7 million. The gain on the sale was $2 million. 2. The company did not issue any new bonds during the year. 3. The company paid a cash dividend during the year. 4. The company did not complete any common stock transactions during the year. Required: 1. Using the indirect method, prepare a statement of cash flows for the year. 2. Assume that Blankley had sales of $3,900, net income of $190, and net cash provided by operating activities of $160 in the prior year (all numbers are stated in millions). Prepare a memo that summarizes your interpretations of Blankley's financial performance