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 $ 32 $ 128 Accounts receivable 149 140 Prepaid insurance 8 4 Inventory 301 183 Buildings and equipment 416 358 Less: Accumulated depreciation (127 ) (248 ) $ 779 $ 565 Liabilities Accounts payable $ 95 $ 116 Accrued expenses payable 7 12 Notes payable 58 0 Bonds payable 170 0 Shareholders Equity Common stock 408 408 Retained earnings 41 29 $ 779 $ 565 RED, INC. Statement of Income For Year Ended December 31, 2018 ($ in millions) Revenues Sales revenue $ 2,060 Expenses Cost of goods sold $ 1,457 Depreciation expense 41 Operating expenses 492 1,990 Net income $ 70 Additional information from the accounting records: During 2018, $238 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $58 million, it was necessary for Red to borrow $58 million from its bank. Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

1. During 2018, $238 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $58 million, it was necessary for Red to borrow $58 million from its bank.

Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)

RED, INC.
Statement of Cash Flows
For year ended December 31, 2018 ($ in millions)
Cash flows from operating activities:
Cash inflows:
Cash outflows:
Net cash flows from operating activities
Cash flows from investing activities:
Net cash flows from investing activities
Cash flows from financing activities:
Net cash flows from financing activities
Net increase (decrease) in cash
Cash balance, January 1
Cash balance, December 31