Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:a. During 2021, $230 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value.b. In order to maintain the usual policy of paying cash dividends of $50 million, it was necessary for Red to borrow $50 million from its bank.

Required:Prepare the statement of cash flows of Red, Inc., for the year ended December 31, 2021. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income with cash flows from operating activities.)

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RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets $ 24 178 $ 110 Cash Accounts receivable 132 Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation 285 175 400 350 (119) (240) $ 775 $ 530 Liabilities $ 87 $100 Accounts payable Accrued liabilities 11 Notes payable Bonds payable 50 160 Shareholders' Equity Common stock 400 400 72 Retained earnings 19 $ 775 $ 530 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in millions) Revenues Sales revenue $2,000 Expenses Cost of goods sold Depreciation expense Operating expenses $1,400 50 447 1,897 Net income $ 103