50.1K

Verified Solution

Link Copied!

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 2020Assets Cash$37 $122 Accounts receivable 210 145 Prepaid insurance 11 9 Inventory 270 188 Buildings and equipment 426 363 Less: Accumulated depreciation (132) (253) $822 $574 Liabilities Accounts payable$100 $126 Accrued liabilities 10 16 Notes payable 73 0 Bonds payable 176 0 Shareholders Equity Common stock 413 413 Retained earnings 50 19 $822 $574

RED, INC. Statement of Income For Year Ended December 31, 2021($ in millions)Revenues Sales revenue $2,210 Expenses Cost of goods sold$1,515 Depreciation expense 41 Operating expenses 550 2,106 Net income $104

Additional information from the accounting records:

1. During 2021, $243 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
2. In order to maintain the usual policy of paying cash dividends of $73 million, it was necessary for Red to borrow $73 million from its bank.

Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (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 & Explanation Solved by verified expert

See Answer