Additional information from the accounting records: a. During 2018, $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 cash flow statement by using worksheet/spread sheet. Please make the spreadsheet/worksheet for preparation of statements of cash flow and cash flow statement by using direct and indirect method. (Please give explanation to the answer)

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2018 2017 Assets Cash $ 24 $ 110 Accounts receivable 178 132 Prepaid insurance 7 3 Inventory 285 175 Buildings and equipment 400 350 Less: Accumulated depreciation (119) (240) $ 775 $ 530 Liabilities Accounts payable $ 87 $ 100 Accrued expenses payable 6 11 Notes payable 50 Bonds payable 160 Shareholders' Equity Common stock 400 400 Retained earnings 72 19 $ 775 $ 530 0 Additional Financial Reporting Issues RED, INC. Statement of Income For Year Ended December 31, 2018 ($ in millions) Revenues Sales revenue Expenses Cost of goods sold $1,400 Depreciation expense 50 Operating expenses 447 Net income $2,000 1,897 $ 103