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 17 $ 130 $ 94 203 220 19 17 222 213 25 195 138 223 163 431 426 (111) (146) 47 50 $1,376 $1,200 $ $ $ 63 19 21 25 37 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 Retained earnings Less: Treasury stock 91 31 17 29 21 0 0 301 (41) 30 95 228 (35) 469 423 121 98 88 0 237 230 (22) @ $1,376 $1,200 $562 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2021 ($ in millions) Revenues and gain: Sales revenue $535 Investment revenue 25 Gain on sale of treasury bills 2 Expenses and loss: Cost of goods sold 193 Salaries expense 86 Depreciation expense 13 Amortization expense 3 Insurance expense 20 Interest expense 41 Loss on sale of equipment 32 Income tax expense 49 Net income 437 $125 Additional information from the accounting records: a. Investment revenue includes Arduous Company's $19 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 $96 million that was one-half depreciated was rendered unusable by a flood. Most major components of the equipment were unharmed and were sold for $16 million d. Temporary differences between pretax accounting income and taxable income caused the deferred tax liability to increase by $16 million e. The preferred stock of Tory Corporation was purchased for $38 million as a long-term investment investee. Additional information from the accounting records: a. Investment revenue includes Arduous Company's $19 million share of the net income of Demur Company, an equity method 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 $96 million that was one-half depreciated was rendered unusable by a flood. Most major components of the equipment were unharmed and were sold for $16 million. d. Temporary differences between pretax accounting income and taxable income caused the deferred tax liability to increase by $16 million e. The preferred stock of Tory Corporation was purchased for $38 million as a long-term investment. f. Land costing $60 million was acquired by issuing $30 million cash and a 15%, four-year $30 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, $101 million. Annual lease payments of $6 million are paid at the beginning of each year starting January 1, 2021. h. $73 million of bonds were retired at maturity. 1. In February, Arduous issued a stock dividend (9.2 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 $22 milion Required: Prepare the statement of cash flows for Arduous Company using the indirect method. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) ARDUOUS COMPANY Statement of Cash Flows For year ended December 31, 2021 ($ in millions) Cash flows from operating activities: Net income Adjustments for noncash effects: Depreciation expense Amortization expense Loss on equipment damage Amortization of discount Changes in operating assets and liabilities: Decrease in accounts receivable Increase in inventory Decrease in prepaid insurance Decrease in accounts payable Decrease in salaries payable Increase in interest payable Decrease in income tax payable Decrease in deferred tax liability $ 0 Net cash flows from operating activities Cash flows from investing activities: Purchase of land Purchase of long-term investment 0 Net cash flows from investing activities Cash flows from financing activities: Purchase of treasury stock Payment of dividends Retirement of bonds payable Sale of preferred stock 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