Exercise 21-27 Statement of cash flows; direct method (LO21-3, 21-5, 21-6, 21-8) 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 $ 148 148 $ 40 200 12 Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation 191 366 300 432 (256) (135) $ 606 $ 849 Liabilities Accounts payable Accrued expenses payable Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings $ 132 19 $ 103 11 66 189 416 416 39 64 $ 849 $ 606 RED, INC. Statement of Income For Year Ended December 31, 2818 (s in millions) Revenues Sales revenue $2,200 Expenses Cost of goods sold Depreciation expense Operating expenses $1,467 41 601 2,109 91 Net income Additional information from the accounting records a. During 2018, $246 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 $66 million, it was necessary for Red to borrOw $66 million from Its bank. Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (l.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.) RED, INC. Statement of Cash Flows For year ended December 31, 2018 ($ 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