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).

Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter17: Financial Statement Analysis
Section17.4: Analyzing Financial Statements Using Financial Ratios
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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:

  1. During 2024, $244 million of equipment was purchased to replace $180 million of equipment (80% depreciated) sold at book value.
  2. 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).

 
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