Question
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 | $ 38 | $ 110 |
Accounts receivable | 215 | 146 |
Prepaid insurance | 13 | 7 |
Inventory | 280 | 200 |
Buildings and equipment | 428 | 364 |
Less: Accumulated depreciation | (133) | (254) |
$ 841 | $ 573 | |
Liabilities | ||
Accounts payable | $ 101 | $ 128 |
Accrued liabilities | 12 | 17 |
Notes payable | 64 | 0 |
Bonds payable | 150 | 0 |
Shareholders Equity | ||
Common stock | 414 | 414 |
Retained earnings | 100 | 14 |
$ 841 | $ 573 |
RED, INCORPORATED | ||
Statement of Income | ||
For Year Ended December 31, 2024 | ||
($ in millions) | ||
Revenues | ||
---|---|---|
Sales revenue | $ 2,140 | |
Expenses | ||
Cost of goods sold | $ 1,447 | |
Depreciation expense | 23 | |
Operating expenses | 520 | 1,990 |
Net income | $ 150 |
Additional information from the accounting records:
During 2024, $244 million of equipment was purchased to replace $180 million of equipment (80% depreciated) sold at book value.
In order to maintain the usual policy of paying cash dividends of $64 million, it was necessary for Red to borrow $64 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).
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started