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 $64 million from its bank. Required: Prepare the statement of cash flows for Red, Incorporated, using the indirect method to report operating activities. Note: Cash outflows should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).
Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below: RED, INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ 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 $64 million from its bank. Required: Prepare the statement of cash flows for Red, Incorporated, using the indirect method to report operating activities. Note: Cash outflows should be indicated with a minus sign. Enter your answers in millions (i.e., 10,000,000 should be entered as 10).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Comparative
RED, INCORPORATED | ||
Comparative Balance Sheets | ||
December 31, 2024 and 2023 ($ in millions) | ||
2024 | 2023 | |
---|---|---|
Assets | ||
Cash | $ 38 | $ 110 |
215 | 146 | |
Prepaid insurance | 13 | 7 |
Inventory | 280 | 200 |
Buildings and equipment | 428 | 364 |
Less: |
(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 |
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
Note:
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