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, 2818 and 2817 (s in millions) 2818 2017 Assets Cash Accounts receivable $154 135 395 484 Less: Allowance for uncollectible accounts Prepaid insurance Inventory Long-term investment Land Buildings and equipment 384 7e 260 390 13 375 115 260 368 Less: Accumulated depreciation Trademark (155) (125) 18 28 $1,525 $1,542 Liabilities Accounts payable Salaries payable Deferred income tax liability Lease liability Bonds payable $ 51 $7e 19 97 155 (31) 16 325 (36) Less: Discount on bonds Shareholders Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings 398 148 60 640 368 13e 670 $1,525 $1,542 NATIONAL NTERCABLE COMPANY Income Statement For Year Ended December 31, 2018 (s in millions) Revenues Sales revenue Investment revenue Gain on sale of investments $ 558 5 $ 572 Expenses Cost of goods sold salaries expense Depreciation expense Trademark amortization expense Bad debt expense Insurance expense Bond interest expense 258 75 58 48 Loss on building fire Income before tax Income tax expense 54 532 48 35 Net income Additional information from the accounting records: a. Investment revenue Includes National Intercable Company's $5 millon share of the net Income of Central Fiber Optics Corporatio an equity method Investee b. A long-term Investment In bonds, originally purchased for $50 million, was sold for $55 millon. C. Pretax accounting Income exceeded taxable Income causing the deferred Income tax lability to increase by $3 million. d. A building that originally cost $80 million, and which was one-fourth depreclated, was destroyed by fire. Some undamaged parts were sold for $6 million. e. The right to use a building was acqulred with a seven-year lease agreement, present value of lease payments, $110 milion. Annu lease payments of $13 million are pald at Jan. 1 of each year starting In 2018. f $170 mlion of bonds were retired at maturity. g. $30 million par value of common stock was sold for $40 milion, and $60 millon of preferred stock was sold at par h. Shareholders were pald cash dividends of $35 million. Requlred 2. Prepare the statement of cash flows. Present cash flows from operating activities by the direct method. (Enter your answers In milllons (I.e., 10,00o,000 should be entered as 10.). Amounts to be deducted should be Indicated with a minus sign.) For year ended December 31, 2018 S in millions) sh flows from operating activities: Cash infiows From customers 531 From investment revenue Cash outflows: (278 (78) (35) To suppliers of goods For insurance For bond interest For income taxes (32) t cash flows from operating activities sh flows from investing activities Sale of long-term investment Sale of building parts t cash fiows from investing activities sh flows from financing activities Retirement of bonds payable Sale of common stock Sale of preferred stock Payment of cash dividends (170) 40 80 t cash fiows from financing activities (105) Net increase in cash 30 sh balance, December 31 30 Noncash investing and financing activities Acquired equipment
