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 Arduous's accounting records is provided also. ARDUOUS COMPANY Comparative Balance Sheets December 31, 2018 and 2017 (S in millions) 2018 2017 Assets Cash 85 118 Accounts receivable Investsent revenue receivable Inventory Prepaid insurance Long-term investnent 194 202 18 213 204 14 168 129 Land 204 ISA Buildings and equipment Less: Accumulated depreciation 416 1408 (1e0) (128) 39 Patent 37 S 1,268 S1.115 Comparative Balar December 31, 2018 and 2017 ($ in millions) 2017 2018 Assets 118 24 85 %24 Cash Accounts receivable Investment revenue receivable 202 194 10 204 213 Inventory 14 Prepaid insurance Long-term investment Land 168 129 204 154 Buildings and equipment Less: Accumulated depreciation 408 416 (128) (100) 39 Patent 37 $ 1,268 $ 1,115 Liabilities Accounts payable 54 73 Salaries payable Bond interest payable Income tax payable Deferred income tax liability Notes payable Lease liability Bonds payable Less: Discount on bonds Shareholders' Equity 10 20 12 16 21 12 19 25 80 219 283 (26) (34) Common stock 442 414 Paid-in capital-excess of pan Preferred stock Retained eannings Less: Treasuny stoCK 89 103 79 248 (13) 5 1,268 5 1.115 Income Statement For Year Ended Decenber 31, 2018 ($ in millions) Revenues and gain: $ 439 Sales revenue Investment revenue 15 Gain on sale of treasury bills 2 $ 456 Expenses and loss: Cost of goods sold Salaries expense 184 77 Depreciation expense Patent amortization expense Insurance expense Bond interest expense Loss on machine damage Income tax expense 11 11 32 26 383 48 Net income $ 73 Additional Information from the accounting records 420 a. Investmnt revenue Includes Arduous Company's $10 million share of the net Income of Demur Company, an equity method Investee. b. Treasury bilils were sold during 2018 at a gain of $2 milion. Arduous Company classifies Its Investments In Treasury bills as cash equivalents. C. A machine originally costing $78 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $13 milon. d. Temporary differences between pretax accounting income and taxable income caused the deferred Income tax liability to increase by $7 million. e. The preferred stock of Tory Corporation was purchased for $29 mililon as a long-term investment. t. Land costing $50 million was acouired by issuing $25 milion cash and a 10%, four-year, $25 million note payable to the seller. 9. The right to use a bulding was acquired with a 15-year lease agreement present value of lease payments. $86 million. Annual lease payments of $6 millon are paid at the beginning of each year storting January 1. 2018. h. $64 million of bonds were retired at maturity Lin February. Arduous issued a stock dividend (5.6 milion 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 treasuny stock at a cost of $13.00 milllon. 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 Intermedlate calculations. Enter your answers In millons (I.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 (5 in mitions) Cash inflows Cash outfiows Noncash investing and financing activities
