Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash $ 28 $ 114 Accounts receivable 184 136 Prepaid insurance 13 8 Inventory 250 179 Buildings and equipment 451 354 Less: Accumulated depreciation (123 $ 803 $ 547 Liabilities Accounts payable $ 93 $ 108 Accrued liabilities 12 18 Notes payable 32 Bonda payable 172 0 Shareholders' Equity Common stock 404 Retained earnings 17 $ 803 $ 547 0 404 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in millions) Revenuen Sales revenue $ 2,020 Expenses Cost of goods sold $1,414 Depreciation expense 41 Operating expenses 460 1.915 Net Income $ 105 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in milliona) Revenues Sales revenue $2,020 Expenses Coat of goods sold $1,414 Depreciation expense 41 Operating expenses 460 1,915 Net Income 105 Additional information from the accounting records: a. During 2021, $277 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $32 million, it was necessary for Red to borrow $32 million from its bank Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) RED, INC. Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and Nabilities: 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 Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash $ 28 $ 114 Accounts receivable 184 136 Prepaid insurance 13 8 Inventory 250 179 Buildings and equipment 451 354 Less: Accumulated depreciation (123 $ 803 $ 547 Liabilities Accounts payable $ 93 $ 108 Accrued liabilities 12 18 Notes payable 32 Bonda payable 172 0 Shareholders' Equity Common stock 404 Retained earnings 17 $ 803 $ 547 0 404 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in millions) Revenuen Sales revenue $ 2,020 Expenses Cost of goods sold $1,414 Depreciation expense 41 Operating expenses 460 1.915 Net Income $ 105 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in milliona) Revenues Sales revenue $2,020 Expenses Coat of goods sold $1,414 Depreciation expense 41 Operating expenses 460 1,915 Net Income 105 Additional information from the accounting records: a. During 2021, $277 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $32 million, it was necessary for Red to borrow $32 million from its bank Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) RED, INC. Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and Nabilities: 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
