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. RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2018 2017 Assets Cash $ 56 $ 173 Accounts receivable 192 149 Inventory 319 192 Buildings and equipment 434 367 Less: Accumulated depreciation (136) (257) $ 865 $ 624 Liabilities Accounts payable $ 104 $ 134 Salaries payable Notes payable Bonds payable 178 Shareholders' Equity Common stock 417 417 Retained earnings 53 $ 865 $ 624 14 67 RED, INC. Statement of Income For Year Ended December 31, 2018 ($ in millions) Revenues: Sales revenue $2,170 Expenses: Cost of goods sold $1,469 ..Annnarinti.nn...onman ...........62... RED, INC. Statement of Income For Year Ended December 31, 2018 ($ in millions) Revenues: Sales revenue $2,170 Expenses: Cost of goods sold $1,469 Depreciation expense 69 Salaries expense 2,071 Net income $ 99 Additional information from the accounting records: a. During 2018, $267 million of equipment was purchased to replace $200 million of equipment (95% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $67 million, it was necessary for Red to borrow $67 million from its bank. Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.) RED, INC. Statement of Cash Flows For year ended December 31, 2018 ($ in millions) RED, INC. Statement of Cash Flows For year ended December 31, 2018 ($ in millions) Cash flows from operating activities: Adjustments for noncash effects: Changes in operating assets and liabilities: Net cash flows from operating activities Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: 0 Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31