A comparative balance sheet and an income statement for Blankley Company are presented below:

Kars Company Comparative Balance Sheet (dollars in millions)
	Ending Balance			Beginning Balance
Assets
Current assets:
Cash and cash equivalents	$	45		$	93
Accounts receivable		700			642
Inventory		680			634
Total current assets		1,425			1,369
Property, plant, and equipment		1,565			1,538
Less accumulated depreciation		806			669
Net property, plant, and equipment		759			869
Total assets	$	2,184		$	2,238
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable	$	272		$	166
Accrued liabilities		186			164
Income taxes payable		89			78
Total current liabilities		547			408
Bonds payable		445			660
Total liabilities		992			1,068
Stockholders' equity:
Common stock		175			175
Retained earnings		1,017			995
Total stockholders' equity		1,192			1,170
Total liabilities and stockholders' equity	$	2,184		$	2,238

Kars Company Income Statement (dollars in millions)
Sales	$	3,880
Cost of goods sold		2,660
Gross margin		1,220
Selling and administrative expenses		892
Net operating income		328
Non operating items: Gain on sale of equipment		2
Income before taxes		330
Income taxes		124
Net income	$	206

Kars also provided the following information:

1.	The company sold equipment that had an original cost of $24 million and accumulated depreciation of $13 million. The cash proceeds from the sale were $13 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. (Enter your answers in millions not in dollars . Amounts to be deducted and negative amounts should be indicated with a minus sign.)

Kars Company Statement of Cash Flows
Operating activities:
(Click to select) Net income Net loss		$
Adjustments to convert net income to cash basis:
(Click to select) Increase in income taxes payable Increase in inventory Increase in accounts payable Increase in accounts receivable Increase in accrued liabilities Depreciation Decrease in inventory Decrease in accounts payable Gain on sale of equipment	$
(Click to select) Increase in accounts payable Increase in inventory Gain on sale of equipment Increase in accrued liabilities Increase in income taxes payable Depreciation Decrease in accounts payable Increase in accounts receivable Decrease in inventory
(Click to select) Depreciation Increase in accrued liabilities Decrease in inventory Gain on sale of equipment Increase in income taxes payable Increase in accounts payable Decrease in accounts payable Increase in accounts receivable Increase in inventory
(Click to select) Decrease in accounts payable Increase in accrued liabilities Increase in inventory Decrease in inventory Gain on sale of equipment Depreciation Increase in accounts payable Increase in income taxes payable Increase in accounts receivable
(Click to select) Decrease in inventory Increase in accrued liabilities Increase in accounts payable Increase in income taxes payable Increase in accounts receivable Depreciation Decrease in accounts payable Increase in inventory Gain on sale of equipment
(Click to select) Gain on sale of equipment Increase in accounts payable Depreciation Increase in income taxes payable Increase in inventory Increase in accounts receivable Decrease in accounts payable Decrease in inventory Increase in accrued liabilities
(Click to select) Increase in income taxes payable Depreciation Increase in accrued liabilities Decrease in accounts payable Decrease in inventory Gain on sale of equipment Increase in accounts payable Increase in inventory Increase in accounts receivable
Net cash (Click to select) used in provided by operating activities
Investing activities:
(Click to select) Proceeds from sale of equipment Depreciation Issuance in bonds payable Increase in accounts receivable Cash dividends Decrease in inventory Increase in property, plant and equipment Increase in inventory Decrease in property, plant and equipment
(Click to select) Decrease in inventory Cash dividends Proceeds from sale of equipment Issuance in bonds payable Depreciation Increase in inventory Decrease in property, plant and equipment Increase in property, plant and equipment Increase in accounts receivable
Net cash (Click to select) used in provided by investing activities
Financing activities:
(Click to select) Proceeds from sale of equipment Decrease in accrued liabilities Increase in accounts receivable Decrease in inventory Cash dividends Decrease in accounts payable Increase in accounts payable Retirement of bonds payable Additions to plant and equipment
(Click to select) Decrease in inventory Cash dividends Decrease in accrued liabilities Retirement of bonds payable Proceeds from sale of equipment Additions to plant and equipment Increase in accounts receivable Decrease in accounts payable Increase in accounts payable
Net cash (Click to select) used in provided by financing activities
(Click to select) Net decrease in cash Net increase in cash
Cash balance, beginning of year
Cash balance, end of year		$