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 | $ 35 | $ 134 |
Accounts receivable | 200 | 143 |
Prepaid insurance | 5 | 3 |
Inventory | 307 | 186 |
Buildings and equipment | 422 | 361 |
Less: Accumulated depreciation | (130) | (251) |
$ 839 | $ 576 | |
Liabilities | ||
Accounts payable | $ 98 | $ 122 |
Accrued liabilities | 4 | 9 |
Notes payable | 61 | 0 |
Bonds payable | 173 | 0 |
Shareholders Equity | ||
Common stock | 411 | 411 |
Retained earnings | 92 | 34 |
$ 839 | $ 576 |
RED, INCORPORATED | ||
Statement of Income | ||
For Year Ended December 31, 2024 | ||
($ in millions) | ||
Revenues | ||
---|---|---|
Sales revenue | $ 2,110 | |
Expenses | ||
Cost of goods sold | $ 1,424 | |
Depreciation expense | 41 | |
Operating expenses | 526 | 1,991 |
Net income | $ 119 |
Additional information from the accounting records:
During 2024, $241 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 $61 million, it was necessary for Red to borrow $61 million from its bank.
Required:
Prepare the statement of cash flows of Red, Incorporated, for the year ended December 31, 2024, using the direct method to report operating activities.
Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated with a minus sign.
Step by Step Solution
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Step: 1
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Step: 2
Step: 3
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