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, 2821 and 2829 ($ in millions) 2821 Assets Cash Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation Liabilities Accounts payable Accrued liabilities Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings Revenues Sales revenue Expenses Cost of goods sold Depreciation expense Operating expenses Net income $ 43 196 9 $1,471 41 548 302 438 (138) $ 850 $ 106 8 69 154 RED, INC. Statement of Income For Year Ended December 31, 2821 ($ in millions) 419 *||| 94 $ 850 $2,190 2,052 $ 138 2828 $ 138 151 4 194 369 (259) $ 597 $ 138 15 8 419 25 $ 597 Additional information from the accounting records: a. During 2021, $249 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $69 million, it was necessary for Red to borrow $69 million from its bank. Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Amounts to be deducted
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2821 and 2829 ($ in millions) 2821 Assets Cash Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation Liabilities Accounts payable Accrued liabilities Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings Revenues Sales revenue Expenses Cost of goods sold Depreciation expense Operating expenses Net income $ 43 196 9 $1,471 41 548 302 438 (138) $ 850 $ 106 8 69 154 RED, INC. Statement of Income For Year Ended December 31, 2821 ($ in millions) 419 *||| 94 $ 850 $2,190 2,052 $ 138 2828 $ 138 151 4 194 369 (259) $ 597 $ 138 15 8 419 25 $ 597 Additional information from the accounting records: a. During 2021, $249 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $69 million, it was necessary for Red to borrow $69 million from its bank. Required: Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Amounts to be deducted
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter12: The Statement Of Cash Flows
Section: Chapter Questions
Problem 12.13AMCP
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![Exercise 21-31 (Algo) Statement of cash flows; Indirect method [LO21-4, 21-5, 21-6, 21-8] Appendix 21A
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting
records of Red, Inc., are provided below.
RED, INC.
Comparative Balance Sheets
December 31, 2021 and 2020 ($ in millions)
2021
Assets
Cash
Accounts receivable
Prepaid insurance
Inventory
Buildings and equipment
Less: Accumulated depreciation
Liabilities
Accounts payable
Accrued liabilities
Notes payable
Bonds payable
Shareholders' Equity
Common stock
Retained earnings
Revenues
Sales revenue
Expenses
Cost of goods sold
Depreciation expense
Operating expenses
Net income
$43
196
9
302
438
(138)
$1,471
41
540
$ 850
$ 106
8
69
154
RED, INC.
Statement of Income
For Year Ended December 31, 2021
($ in millions)
419
94
$ 850
$2,190
2,052
$138
2020
$ 138
151
4
194
369
(259)
$ 597
$138
15
0
419
25
$ 597
Additional information from the accounting records:
a. During 2021, $249 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
b. In order to maintain the usual policy of paying cash dividends of $69 million, it was necessary for Red to borrow $69 million from its
bank.
Required:
Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Amounts to be deducted
should be indicated with a minus sign. Enter your answers in millions (l.e., 10,000,000 should be entered as 10).)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff47b5d26-30f7-46ec-8326-db865c869990%2Fff6011ac-10a3-40b8-860b-0c5e6bb8bad7%2Fwxpa0nj_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 21-31 (Algo) Statement of cash flows; Indirect method [LO21-4, 21-5, 21-6, 21-8] Appendix 21A
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting
records of Red, Inc., are provided below.
RED, INC.
Comparative Balance Sheets
December 31, 2021 and 2020 ($ in millions)
2021
Assets
Cash
Accounts receivable
Prepaid insurance
Inventory
Buildings and equipment
Less: Accumulated depreciation
Liabilities
Accounts payable
Accrued liabilities
Notes payable
Bonds payable
Shareholders' Equity
Common stock
Retained earnings
Revenues
Sales revenue
Expenses
Cost of goods sold
Depreciation expense
Operating expenses
Net income
$43
196
9
302
438
(138)
$1,471
41
540
$ 850
$ 106
8
69
154
RED, INC.
Statement of Income
For Year Ended December 31, 2021
($ in millions)
419
94
$ 850
$2,190
2,052
$138
2020
$ 138
151
4
194
369
(259)
$ 597
$138
15
0
419
25
$ 597
Additional information from the accounting records:
a. During 2021, $249 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
b. In order to maintain the usual policy of paying cash dividends of $69 million, it was necessary for Red to borrow $69 million from its
bank.
Required:
Prepare the statement of cash flows for Red, Inc., using the indirect method to report operating activities. (Amounts to be deducted
should be indicated with a minus sign. Enter your answers in millions (l.e., 10,000,000 should be entered as 10).)
Transcribed Image Text:RED, INC.
Statement of Cash Flows
For year ended December 31, 2021 ($ in millions)
Cash flows from operating activities:
Adjustments for noncash effects:
Changes in operating assets and liabilities:
Net cash flows from operating activities
Cash flows from investing activities:
Net cash flows from investing activities
Cash flows from financing activities:
Net cash flows from financing activities
Net increase (decrease) in cash
Cash balance, January 1
Cash balance, December 31
$
$
0
0
0
0
0
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