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. 2017 $ 55 170 (6) 12 165 90 150 270 (75) NATIONAL INTERCABLE COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2018 Assets Cash $ 57 Accounts receivable 181 Less: Allowance for uncollectible accounts (8) Prepaid insurance 7 Inventory 170 Long-term investment 66 Land 150 Buildings and equipment 290 Less: Accumulated depreciation (85) Trademark $ 852 Liabilities Accounts payable $ 30 Salaries payable Deferred income tax liability 18 Lease liability 68 Bonds payable Less: Discount on bonds (22) Shareholders' Equity Common stock 310 Paid-in capital-excess of par Preferred stock Retained earnings 155 $ 852 24 25 856 $ 45 15 0 275 (25) 50 290 85 0 163 $ 856 15 NATIONAL INTERCABLE COMPANY Income Statement For Year Ended December 31, 2018 ($ in millions) Revenues Sales revenue $320 Investment revenue Gain on sale of investments 5 $ 340 Expenses Cost of goods sold 125 Salaries expense Depreciation expense Trademark amortization expense Bad debt expense Insurance expense Bond interest expense Loss on building fire Income before tax Income tax expense Net income 42298 $ 22 Additional information from the accounting records: a. Investment revenue includes National Intercable Company's $6 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 $30 million, was sold for $35 million. c. Pretax accounting income exceeded taxable income, causing the deferred income tax liability to increase by $3 million. d. A building that originally cost $60 million, and which was one-fourth depreciated, was destroyed by fire. Some undamaged parts were sold for $3 million. e. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $80 million. Annual lease payments of $12 million are paid at Jan. 1 of each year starting in 2018. f. $130 million of bonds were retired at maturity. g. $20 million par value of common stock was sold for $30 million, and $50 million of preferred stock was sold at par. h. Shareholders were paid cash dividends of $30 million. Required: 2. Prepare the statement of cash flows. Present cash flows from operating activities by the direct method. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10.). Amounts to be deducted should be indicated with a minus sign.) ($ in millions) Cash flows from operating activities: Cash inflows: From customers From investment revenue Cash outflows: To suppliers of goods To employees For insurance For bond interest For income taxes Net cash flows from operating activities Cash flows from investing activities: Sale of long-term investment Sale of building parts OOO OOOOOOOOOOOOOOOOOO Net cash flows from investing activities Cash flows from financing activities: Payment on lease liability Retirement of bonds payable Sale of common stock Sale of preferred stock Payment of cash dividends Net cash flows from financing activities Net increase in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities: Acquired equipment