The comparative balance sheets for 2018 and 2017 are given below for Surmise Company. Net income for 2018 was $70 million.

SURMISE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	2018				2017
Assets
Cash	$	26			$	32
Accounts receivable		84				96
Less: Allowance for uncollectible accounts		(19	)			(4	)
Prepaid expenses		14				11
Inventory		132				115
Long-term investment		104				70
Land		88				88
Buildings and equipment		359				245
Less: Accumulated depreciation		(122	)			(98	)
Patent		20				22
	$	686			$	577
Liabilities
Accounts payable	$	14			$	32
Accrued liabilities		3				15
Notes payable		38				0
Lease liability		107				0
Bonds payable		59				117
Shareholders Equity
Common stock		64				50
Paid-in capitalexcess of par		259				205
Retained earnings		142				158
	$	686			$	577

Required:

Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2018. 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 $7 million are paid at January 1 of each year starting in 2018.)

SURMISE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($in millions) 2018 2017 Assets Cash Accounts receivable $26$ 32 96 Less: Allowance for uncollectible accounts Prepaid expenses Inventory Long-term investment Land Buildings and equipment 84 (19) 14 132 104 115 70 359 245 (122) (98) Less: Accumulated depreciation Patent 20 $ 686 $ 577 Liabilities Accounts payable Accrued liabilities Notes payable Lease liability Bonds payable Shareholders' Equity Common stock Paid-in capital-excess of par Retained earnings $14 32 15 3 38 107 59 50 205 158 $ 686 $ 577 64 259 142