Exercise 21-31 Statement of cash flows;indirect method [LO21-4, 21-5, 21-6, 21-8] Appendix A

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.

Additional info:

1. During 2018, $212 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $52 million, it was necessary for Red to borrow $52 million from its bank.

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. 6 RED, IC Comparative Balance Sheets December 31, 2018 and 2817 (S in millions) 2018 2017 3.5 points Cash Accounts receivable Inventory Buildings and equipment Less: Accumulated depreciation(121)(242) $ 37 128 134 203 289 352 $ 792 541 s90 184 15 Accounts payable Salaries payable Notes payable Bonds payable 52 161 Common stock Retained earnings 402 402 S 792 541 RED, INC Statement of Income For Year Ended December 31, 2818 (s in millions) Revenue s Sales revenue $2,018 Expenses Cost of goods sold Depreciation expense Salaries expense 1,439 41 s 109 Net income Additional information from the accounting records: a. During 2018, $212 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 $52 million, it was necessary for Red to borrow $52 million from its Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Enter your answers in millions (i.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 (S in millions) Cash flows from operating activities Adjustments for noncash effects Depreciation expense Changes in operating assets and liabilities Increase in accounts recervable Increase in inventory Decrease in accounts payable Decrease in salaries payable Net cash fows 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