**THIS REQUIRES THE INDIRECT METHOD**

**THIS REQUIRES THE INDIRECT METHOD**

The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given below for Arduous Company. Additional information from Arduous's accounting records is provided also. ARDUOUS COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent $ 109 190 6 205 4 156 196 412 (97) 30 $ 1,211 $ 81 194 4 200 8 125 150 400 (120) 32 $ 1,074 $ $ Liabilities Accounts payable Salaries payable Interest payable (bonds) Income tax payable Deferred tax liability Notes payable Lease liability Bonds payable Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock 50 6 8 12 11 23 75 215 (22) 65 11 4 14 8 0 0 275 (25) 430 95 75 410 85 0 Interest payable (bonds) Income tax payable Deferred tax liability Notes payable Lease liability Bonds payable Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings Less: Treasury stock 8 12 11 23 75 215 (22) 4 14 8 0 0 275 (25) 430 410 95 85 75 0 242 227 (9) 0 $ 1,211 $ 1,074 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2021 ($ 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 Depreciation expense Amortization expense 2 Insurance expense 7 Interest expense 28 Loss on sale of equipment 18 Income tax expense 36 356 Net income $ 67 871] 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 2021 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents. C. Equipment originally costing $70 million that was one-half depreciated was rendered unusable by a flood. Most major components of the equipment were unharmed and were sold for $17 million. d. Temporary differences between pretax accounting income and taxable income caused the deferred 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, 2021. h. $60 million of bonds were retired at maturity. i. In February, Arduous issued a 5% 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 $9 million. Required: Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Answer is not complete. ARDUOUS COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: $ 67 3 2 Changes in operating assets and liabilities: (200) (78) (200) X (78) X $ (206) Net cash flows from operating activities Cash flows from investing activities: 0 Net cash flows from investing activities Cash flows from financing activities: 0 Net cash flows from investing activities Cash flows from financing activities: 0 Net cash flows from financing activities Net increase in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities: $ 0