Problem 21-3 Statement of cash flows; direct method [LO21-3, 21-8] The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for National Intercable Company. Additional information from NIC's accounting records is provided also NATIONAL NTERCABLE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 s in millions) 2018 2017 Assets Cash Accounts receivable $ 157 140 410 418 Less: Allowance for uncollectible accounts Prepaid insurance Inventory Long-term investment Land Buildings and equipment 396 76 270 406 14 390 120 270 370 Less: Accumulated depreciation Trademark (139) (130) 23 25 $1,607$1,604 Liabilities Accounts payable Salaries payable Deferred income tax liability Lease liability Bonds payable $ 52 72 8 17 21 106 140 (32) 330 Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings (37) 410 370 135 70 690 709 $1,607 $1,604 NATIONAL INTERCABLE COMPANY Income Statement For Year Ended December 31, 2018 (s in millions) Revenues Sales revenue Investment revenue Gain on sale of investments $ 570 17 $ 591 Expenses Cost of goods sold 260 NATIONAL INTERCABLE COMPANY Income Statement For Year Ended December 31, 2018 (s in millions) Revenues Sales revenue Investment revenue Gain on sale of investments $ 570 17 ^ s 591 Expenses Cost of goods sold Salaries expense Depreciation expense Trademark amortization expense Bad debt expense Insurance expense Bond interest expense 260 76 30 7 60 Loss on building fire Income before tax 57 534 57 36 $ 21 Income tax expense Net income Additional information from the accounting records: a. Investment revenue includes National Intercable Company's $8 million share of the net income of Central Fiber Optics Corporation, an equity method investee. b. A long-term investment in bonds, originally purchased for $52 million, was sold for $56 million. c. Pretax accounting income exceeded taxable income causing the deferred income tax liability to increase by $4 million. Some undamaged parts were sold for $6 million payments, $120 million. Annual lease payments of $14 million are paid at Jan. 1 of each year starting in d. A building that originally cost $84 million, and which was one-fourth depreciated, was destroyed by fire e. The right to use a building was acquired with a seven-year lease agreement, present value of lease 2018 f. $190 million of bonds were retired at maturity. g. $40 million par value of common stock was sold for $50 million, and $70 million of preferred stock was sold at par. h. Shareholders were paid cash dividends of $40 million Required 2. Prepare the statement of cash flows. Present cash flows from operating activities by the direct method (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: 2. Prepare the statement of cash flows. Present cash flows from operating activities by the direct method. (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.) NATIONAL INTERCABLE COMPANY Statement of Cash Flows For year ended December 31, 2018 (S in millions) Cash inflows: Cash outflows: Cash inflows Cash outflows: Noncash investing and financing activities
