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RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash $ 44 $ 152 Accounts receivable 198
RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash $ 44 $ 152 Accounts receivable 198 152 Prepaid insurance 12 5 Inventory 325 195 Buildings and equipment 440 370 Less: Accumulated depreciation (139) (260) $ 880 $ 614 Liabilities Accounts payable Accrued liabilities Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings $ 107 $ 140 11 16 70 0 181 0 420 420 91 38 $ 880 $ 614 RED, INC. Statement of Income For Year Ended December 31, 2021 Revenues ($ in millions) Sales revenue $2,200 Expenses Cost of goods sold Depreciation expense $1,482 50 Operating expenses 545 2,077 Net income $ 123 Additional information from the accounting records: a. During 2021, $250 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $70 million, it was necessary for Red to borrow $70 million from its bank. Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities.
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