Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below: RED, INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) 2024 2023 Assets Cash $ 38 $ 110 Accounts receivable 215 146 Prepaid insurance 13 7 Inventory 280 200 Buildings and equipment 428 364 Less: Accumulated depreciation (133) (254) $ 841 $ 573 Liabilities Accounts payable $ 101 $ 128 Accrued liabilities 12 17 Notes payable 64 0 Bonds payable 150 0 Shareholders’ Equity Common stock 414 414 Retained earnings 100 14 $ 841 $ 573 RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Revenues Sales revenue $ 2,140 Expenses Cost of goods sold $ 1,447 Depreciation expense 23 Operating expenses 520 1,990 Net income $ 150 Additional information from the accounting records: During 2024, $244 million of equipment was purchased to replace $180 million of equipment (80% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $64 million, it was necessary for Red to borrow $64 million from its bank. Required: Prepare the statement of cash flows for Red, Incorporated, using the indirect method to report operating activities. Note: Cash outflows should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter3: The Basics Of Record Keeping And Financial Statement Preparation: Income Statement

Section: Chapter Questions

Problem 20P

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Question

Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below:

RED, INCORPORATED
Comparative Balance Sheets
December 31, 2024 and 2023 ($ in millions)
	2024	2023
Assets
Cash	$ 38	$ 110
Accounts receivable	215	146
Prepaid insurance	13	7
Inventory	280	200
Buildings and equipment	428	364
Less: Accumulated depreciation	(133)	(254)
	$ 841	$ 573
Liabilities
Accounts payable	$ 101	$ 128
Accrued liabilities	12	17
Notes payable	64	0
Bonds payable	150	0
Shareholders’ Equity
Common stock	414	414
Retained earnings	100	14
	$ 841	$ 573

RED, INCORPORATED
Statement of Income
For Year Ended December 31, 2024
($ in millions)
Revenues
Sales revenue		$ 2,140
Expenses
Cost of goods sold	$ 1,447
Depreciation expense	23
Operating expenses	520	1,990
Net income		$ 150

Additional information from the accounting records:

During 2024, $244 million of equipment was purchased to replace $180 million of equipment (80% depreciated) sold at book value.
In order to maintain the usual policy of paying cash dividends of $64 million, it was necessary for Red to borrow $64 million from its bank.