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

The comparative balance sheets for 2016 and 2015 and the income statement for 2016 are given below for Arduous Company. Additional information from Arduouss accounting records is provided also.

ARDUOUS COMPANY Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions)
	2016		2015
Assets
Cash	$	120	$	83
Accounts receivable		192		198
Investment revenue receivable		10		6
Inventory		209		202
Prepaid insurance		8		12
Long-term investment		164		127
Land		200		152
Buildings and equipment		414		404
Less: Accumulated depreciation		(100)		(124)
Patent		34		38
	$	1,251	$	1,098
Liabilities
Accounts payable	$	52	$	69
Salaries payable		10		13
Bond interest payable		12		6
Income tax payable		14		18
Deferred income tax liability		15		10
Notes payable		24		0
Lease liability		84		0
Bonds payable		217		279
Less: Discount on bonds		(24)		(26)
Shareholders Equity
Common stock		460		412
Paid-in capitalexcess of par		102		87
Preferred stock		77		0
Retained earnings		219		230
Less: Treasury stock		(11)		0
	$	1,251	$	1,098

ARDUOUS COMPANY Income Statement For Year Ended December 31, 2016 ($ in millions)
Revenues
Sales revenue			$	425
Investment revenue				16
Gain on sale of treasury bills				4	$	445
Expenses and loss:
Cost of goods sold				182
Salaries expense				75
Depreciation expense				13
Patent amortization expense				4
Insurance expense				9
Bond interest expense				30
Loss on machine damage				22
Income tax expense				38		373
Net income					$	72

Additional information from the accounting records:
a.	Investment revenue includes Arduous Companys $10 million share of the net income of Demur Company, an equity method investee.
b.	Treasury bills were sold during 2016 at a gain of $4 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
c.	A machine originally costing $74 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $15 million.
d.	Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $5 million.
e.	The preferred stock of Tory Corporation was purchased for $27 million as a long-term investment.
f.	Land costing $48 million was acquired by issuing $24 million cash and a 12%, four-year, $24 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, $84 million.
h.	$62 million of bonds were retired at maturity.
i.	In February, Arduous issued a 4% stock dividend (6 million shares). The market price of the $8 par value common stock was $10.50 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 $11.00 million.

Required:

Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2016. 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.)