Comparative balance sheets for 2016 and 2015, a statement of income for 2016, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions) 2016 2015 Assets Cash $ 44 $ 152 Accounts receivable 198 152 Prepaid insurance 12 5 Inventory 325 195 Buildings and equipment 440 370 Less: Accumulated depreciation (139 ) (260 ) $ 880 $ 614 Liabilities Accounts payable $ 107 $ 140 Accrued expenses payable 11 16 Notes payable 70 0 Bonds payable 181 0 Shareholders Equity Common stock 420 420 Retained earnings 91 38 $ 880 $ 614 RED, INC. Statement of Income For Year Ended December 31, 2016 ($ in millions) Revenues Sales revenue $ 2,200 Expenses Cost of goods sold $ 1,482 Depreciation expense 50 Operating expenses 545 2,077 Net income $ 123 Additional information from the accounting records: a. During 2016, $250 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 $70 million, it was necessary for Red to borrow $70 million from its bank. Required: Prepare the statement of cash flows of Red, Inc. using the indirect method to report operating activities.