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Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided
Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below: RED, INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) 2024 2023 Assets Cash $ 40 $ 148 Accounts receivable 200 148 Prepaid insurance 12 9 Inventory 300 191 Buildings and equipment 432 366 Less: Accumulated depreciation (135) (256) $ 849 $ 606 Liabilities Accounts payable $ 103 $ 132 Accrued liabilities 11 19 Notes payable 76 0 Bonds payable 189 0 Shareholders Equity Common stock 416 416 Retained earnings 54 39 $ 849 $ 606 RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Revenues Sales revenue $ 2,200 Expenses Cost of goods sold $ 1,467 Depreciation expense 41 Operating expenses 601 2,109 Net income $ 91 Additional information from the accounting records: During 2024, $246 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 $76 million, it was necessary for Red to borrow $76 million from its bank. Required: Prepare the statement of cash flows for Red, Incorporated, using the indirect method to report operating activities. Note: Cash outflows should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10)
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