Blue Sky Corporation is negotiating a loan for expansion purposes and the bank requires financial statements. Before closing the accounting records for the year ended December 31, 2024, Blue Skys controller prepared the following financial statements:

BLUE SKY CORPORATION Balance Sheet At December 31, 2024 and 2023
($ in millions)
	2024	2023
Assets
Cash	$ 43	$ 49
Investments	71	45
Accounts receivable	76	86
Inventory	169	160
Allowance for uncollectible accounts	(8)	(8)
Prepaid expenses	5	3
Property and equipment (net)	263	189
Total assets	$ 619	$ 524
Liabilities and Shareholders Equity
Accounts payable	$ 24	$28
Accrued liabilities	14	13
Notes payable	126	73
Common stock	86	80
Paid-in capital in excess of par	219	175
Retained earnings	150	155
Total liabilities and shareholders equity	$ 619	$ 524

BLUE SKY CORPORATION
Income Statement
For the Year Ended December 31, 2024
($ in millions)
Sales revenue		$ 586
Service revenue		270
Expenses:
Cost of goods sold	$ 531
Selling expense	79
General and administrative expense	163
Interest expense	11
Income tax expense	18
Total expenses		802
Net income		$ 54

Additional Information:

1. The companys common stock is traded on an organized stock exchange. The corporation issued 600,000 shares of $10 par value common stock on July 1, 2024. There were 8,000,000 shares issued and outstanding at December 31, 2023.
2. The investment portfolio consists of short-term investments valued at $14,000,000. The remaining investments will not be sold until the year 2026.
3. Notes payable consist of three notes:

• $12,000,000 one-year note due on September 30, 2025.
• $73,000,000 note issued on June 1, 2023. Interest is paid annually on June 1^st with the principal due at maturity, June 1, 2028.
• $41,000,000 note due in two equal installments of $20,500,000 plus interest. Payments are scheduled for April 30, 2025 and April 30, 2026.

Interest on the loans has been correctly accrued and is included in accrued liabilities on the balance sheet and interest expense in the income statement.

1. Included in general and administrative expense is depreciation expense of $15,000,000.

Required:

The controller prepared financial statements in the attached contain a number of deficiencies in presentation. Prepare a corrected:

• classified balance sheet as of December 31, 2024,
• multistep income statement for the year ended December 31, 2024, and
• statement of cash flows for the year ended December 31, 2024.