The comparative balance sheets for 2024 and 2023 are given below for Surmise Company. Net income for 2024 was $82 million.

SURMISE COMPANY
Comparative Balance Sheets
December 31, 2024 and 2023
($ in millions)
	2024	2023
Assets
Cash	$ 52	$ 56
Accounts receivable	90	108
Less: Allowance for uncollectible accounts	(24)	(3)
Prepaid expenses	18	17
Inventory	138	115
Long-term investment	81	40
Land	102	102
Buildings and equipment	409	275
Less: Accumulated depreciation	(140)	(110)
Patent	26	28
	$ 752	$ 628
Liabilities
Accounts payable	$ 20	$ 44
Accrued liabilities	2	21
Notes payable	50	0
Lease liability	125	0
Bonds payable	66	136
Shareholders Equity
Common stock	70	50
Paid-in capitalexcess of par	263	205
Retained earnings	156	172
	$ 752	$ 628

Required:

Prepare the statement of cash flows of Surmise Company for the year ended December 31, 2024. 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 $9 million are paid at January 1 of each year starting in 2024.)

SURMISE COMPANY Statement of Cash Flows For year ended December 31, 2024 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Depreciation expense Bad debt expense Amortization expense Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in prepaid expenses Decrease in accrued liabilities Net cash flows from operating activities $0 Cash flows from investing activities: Purchase of long-term investment Net cash flows from investing activities 0 Cash flows from financing activities: Payment of lease liability Issuance of notes payable Retirement of bonds payable Sale of common stock Payment of dividends Net cash flows from financing activities 0 Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 $0 Noncash investing and financing activities: