The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also.

ARDUOUS COMPANY

Comparative Balance Sheets

December 31, 2018 and 2017

($ in millions)

2018

2017

Assets

Cash

$

109

$

81

Accounts receivable

190

194

Investment revenue receivable

6

4

Inventory

205

200

Prepaid insurance

4

8

Long-term investment

156

125

Land

196

150

Buildings and equipment

412

400

Less: Accumulated depreciation

(97

)

(120

)

Patent

30

32

$

1,211

$

1,074

Liabilities

Accounts payable

$

50

$

65

Salaries payable

6

11

Bond interest payable

8

4

Income tax payable

12

14

Deferred income tax liability

11

8

Notes payable

23

0

Lease liability

75

0

Bonds payable

215

275

Less: Discount on bonds

(22

)

(25

)

Shareholders' Equity

Common stock

430

410

Paid-in capitalexcess of par

95

85

Preferred stock

75

0

Retained earnings

242

227

Less: Treasury stock

(9

)

0

$

1,211

$

1,074

ARDUOUS COMPANY

Income Statement

For Year Ended December 31, 2018

($ in millions)

Revenues and gain:

Sales revenue

$

410

Investment revenue

11

Gain on sale of treasury bills

2

$

423

Expenses and loss:

Cost of goods sold

180

Salaries expense

73

Depreciation expense

12

Patent amortization expense

2

Insurance expense

7

Bond interest expense

28

Loss on machine damage

18

Income tax expense

36

356

Net income

$

67

Additional information from the accounting records:

a.Investment revenue includes Arduous Company's $6 million share of the net income of Demur Company, an equity method investee.

b.Treasury bills were sold during 2018 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.

c.A machine originally costing $70 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $17 million.

d.Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $3 million.

e.The preferred stock of Tory Corporation was purchased for $25 million as a long-term investment.

f.Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller.

g.The right to use a building was acquired with a 15-year lease agreement; present value of lease payments, $82 million. Annual lease payments of $7 million are paid at the beginning of each year starting January 1, 2018.

h.$60 million of bonds were retired at maturity.

i.In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time.

j.In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million.

Required:

Prepare the statement of cash flows for Arduous Company using theindirect method.