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Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (l.e., 10,000,000
Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (l.e., 10,000,000 should be entered as 10). Amounts to be deducted should be Indicated with a minus sign.) Answer is complete but not entirely correct. RED, INC. Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Cash inflows: From customers $ 1,963 Cash outflows: To suppliers of goods 1,539 For operating expenses xpenses 439 3,941 Net cash flows from operating activities Cash flows from investing activities: Purchase of equipment Sale of equipment (231) 18 Net cash flows from investing activities Cash flows from financing activities: Issuance of note payable Issuance of bonds payable Payment of dividends 51 161 (51) Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 161 3,889 52 3,941 Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional Information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash $ 25 $ 112 Accounts receivable 180 133 Prepaid insurance Inventory 287 176 Buildings and equipment Less: Accumulated depreciation (120) $ 782 $ 535 Liabilities Accounts payable 88 $ 102 Accrued liabilities Notes payable Bonds payable 161 Shareholders' Equity Common stock 401 401 Retained earnings $ 782 $ 535 (241) 74 19 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in millions) Revenues Sales revenue $2,010 Expenses Cost of goods sold $1,414 Depreciation expense 41 Operating expenses 449 1,904 Net income $ 106 Additional Information from the accounting records a. During 2021, $231 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $51 million, it was necessary for Red to borrow $51 million from its bank. Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions
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