LO4 Comparative statements of financial position for 2013 and 2012, the income statement for 2013, and additional information from the accounting records of Red Ltd are provided below. E 21-27 Statement of cash flows; direct method - LO3 LOS LOS LOS RED LTD Comparative Statements of Financial Position December 31, 2013 and 2012 is in millions) 2013 2012 $ 24 178 $110 132 Assets Cash Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation 175 350 285 400 (119) $775 (240) $530 Liabilities Accounts payable Accrued expenses payable Notes payable Bonds payable Shareholders' Equity Ordinary share capital Retained earnings RED LTD Income Statement For Year Ended December 31, 2013 (5 in millions) Revenues Sales revenue Expenses Cost of goods sold $1,400 Depreciation expense Operating expenses 447 Net income $2,000 1,897 $ 103 Additional information from the accounting records: a. During 2013, S230 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $50 million, it was necessary for Red to borrow $50 million from its bank. Required: Prepare the statement of cash flows of Red Ltd for the vear ended December 31. 2013. assuming Red classifies dividends paid as a financing activity. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income to cash flows from operating activities.)