Problem 21-18 (Algo) Statement of cash flows; Indirect method [LO21-4, 21-8] The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given below for Arduous Company Additional information from Arduous's accounting records is provided also. ARDUOUS COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent $ 132 204 21 222 19 199 224 433 (110) 46 $1,390 $ 95 222 18 214 26 139 164 428 (148) 49 $1,207 $ $ Liabilities Accounts payable Salaries payable Interest payable (bonds) Income tax payable Deferred tax liability Notes payable Lease liability Bonds payable Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings Less: Treasury stock 64 21 23 26 39 30 96 229 (36) 93 32 18 30 22 @ 303 (42) 472 123 89 237 (23) $1,390 424 99 B 228 $1,207 $ 550 26 $ 579 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2021 ($ in millions) Revenues and gain: Sales revenue Investment revenue Gain on sale of treasury bills Expenses and loss: Cost of goods sold Salaries expense Depreciation expense Amortization expense Insurance expense Interest expense Loss on sale of equipment Income tax expense Net income 194 87 11 21 42 31 5e 439 $ 14e 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 2021 at a gain of $3 million. Arduous company classifies its investments in Treasury bills as cash equivalents. c. Equipment originally costing $98 million that was one-half depreciated was rendered unusable by a flood. Most major components of the equipment were unharmed and were sold for $18 million. d. Temporary differences between pretax accounting income and taxable income caused the deferred tax liability to increase by $17 million. e. The preferred stock of Tory Corporation was purchased for $39 million as a long-term investment. f. 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, $103 million. Annual lease payments of $7 million are paid at the beginning of each year starting January 1, 2021. 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. j. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $23 million. Required: Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be Indicated with a minus sign. Enter your answers in millions (1.e., 10,000,000 should be entered as 10).) ARDUOUS COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Depreciation expense Amortization expense Loss on equipment damage Changes in operating assets and liabilities: Amortization of discount Decrease in accounts receivable Increase in investment revenue receivable Increase in investment due to equity method income Decrease in prepaid insurance Increase in inventory Decrease in accounts payable Decrease in salaries payable Increase in interest payable Decrease in income tax payable Increase in deferred tax liability Net cash flows from operating activities Cash flows from investing activities: Sale of equipment components Purchase of long-term investment Purchase of land S 0 0 Net cash flows from investing activities Cash flows from financing activities: Payment on lease liability Retirement of bonds payable Sale of preferred stock Payment of dividends Purchase of treasury stock Net cash flows from financing activities Net increase in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities: Acquired building with lease Acquired land with cash and note S 0