Problem 21-11 Prepare a statement of cash flows; direct method [LO21-3, 21-8]

The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information from Arduouss accounting records is provided also.

4 Problem 21-11 Prepare a statement of cash flows; direct method (L021-3, 21-8] The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also. 4 points ARDUOUS COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2018 2017 eBook Assets Cash 137 95 Accounts receivable 204 222 Investment revenue receivable 21 18 Print 222 Inventory 214 Prepaid insurance Long-term investment 19 26 199 139 Land 224 164 References Buildings and equipment Less: Accumulated depreciation 426 428 (110) (148) 46 Patent $ 1,388 $ 1,207 Liabilities Accounts payable Salaries payable Bond interest payable 64 93 21 32 23 18 Income tax payable Deferred income tax liability Notes payable Lease liability Bonds payable 26 30 39 22 30 89 229 303 ( 42) Less: Discount on bonds (36) Shareholders' Equity Common stock 472 424 Paid-in capital-excess of par 123 99 Preferred stock 89 Retained earnings 242 228 (23) $ 1,388 Less: Treasury stock $ 1,207 4 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2018 ($ in millions) Revenues and gain: Sales revenue $ 550 points Investment revenue 26 Gain on sale of treasury bills Expenses and loss: Cost of goods sold Salaries expense Depreciation expense Patent amortization expense Insurance expense Bond interest expense Loss on machine damage 3 $579 194 87 11 eBook 3 21 42 Print 31 Income tax expense 50 439 $ 140 Net income References Additional information from the accounting records: a. Investment revenue includes Arduous Company's $21 million share of the net income of Demur Company, an equity method investee. b. Treasury bills were sold during 2018 at a gain of $3 million. Arduous Company classifies its investments in Treasury bills as cash equivalents. c. A machine originally costing $98 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $18 million. d. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $17 million. preferred stock of Tory Corporation was purchased for $39 million as a long-term investment. Land costing $60 million was acquired by issuing $30 million cash and a 10%, four-year, $30 million note payable to the seller. g. The right to use a building was acquired with a 15-year lease agreement; present value of lease payments, $96 million. Annual lease payments of $7 million are paid at the beginning of each year starting January 1, 2018. h. $74 million of bonds were retired at maturity. i. In February, Arduous issued a stock dividend (9.6 million shares). The market price of the $5 par value common stock was $7.50 per share at that time. Also the company paid a cash dividend. j. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $23.00 million. The e. Required: Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Do not round your intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10.). Amounts to be deducted should be indicated with a minus sign.) Required: Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Do not round your intermediate calculations. Enter your answers in millions (l.e., 10,000,000 should be entered as 10.). Amounts to be deducted should be indicated with a minus sign.) ARDUOUS COMPANY Statement of Cash Flows For year ended December 31, 2018 ($ in millions) Cash flows from operating activities: Cash inflows: Cash outflows: Noncash investing and financing activities