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 $ 26 $ 114 Accounts receivable 203 134 Prepaid insurance 11 6 Inventory 289 177 Buildings and equipment 384 352 Less: Accumulated depreciation (121) (242) $ 792 $ 541 Liabilities Accounts payable $ 90 $ 104 Accrued liabilities 10 15 Notes payable 52 0 Bonds payable 161 0 Shareholders’ Equity Common stock 402 402 Retained earnings 77 20 $ 792 $ 541 RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Revenues Sales revenue $ 2,010 Expenses Cost of goods sold $ 1,439 Depreciation expense 41 Operating expenses 421 1,901 Net income $ 109 Additional information from the accounting records: During 2024, $212 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $52 million, it was necessary for Red to borrow $52 million from its bank. Required: Prepare the statement of cash flows of Red, Incorporated, for the year ended December 31, 2024, using the direct method to report operating activities. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated with a minus sign.
Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below: RED, INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) 2024 2023 Assets Cash $ 26 $ 114 Accounts receivable 203 134 Prepaid insurance 11 6 Inventory 289 177 Buildings and equipment 384 352 Less: Accumulated depreciation (121) (242) $ 792 $ 541 Liabilities Accounts payable $ 90 $ 104 Accrued liabilities 10 15 Notes payable 52 0 Bonds payable 161 0 Shareholders’ Equity Common stock 402 402 Retained earnings 77 20 $ 792 $ 541 RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Revenues Sales revenue $ 2,010 Expenses Cost of goods sold $ 1,439 Depreciation expense 41 Operating expenses 421 1,901 Net income $ 109 Additional information from the accounting records: During 2024, $212 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $52 million, it was necessary for Red to borrow $52 million from its bank. Required: Prepare the statement of cash flows of Red, Incorporated, for the year ended December 31, 2024, using the direct method to report operating activities. Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Cash outflows should be indicated with a minus sign.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Exercise 21-27 (Algo) Statement of cash flows ; direct method [LO21-3, 21-5, 21-6, 21-8]
Comparative
RED, INCORPORATED | ||
---|---|---|
Comparative Balance Sheets | ||
December 31, 2024 and 2023 ($ in millions) | ||
2024 | 2023 | |
Assets | ||
Cash | $ 26 | $ 114 |
203 | 134 | |
Prepaid insurance | 11 | 6 |
Inventory | 289 | 177 |
Buildings and equipment | 384 | 352 |
Less: |
(121) | (242) |
$ 792 | $ 541 | |
Liabilities | ||
Accounts payable | $ 90 | $ 104 |
Accrued liabilities | 10 | 15 |
Notes payable | 52 | 0 |
Bonds payable | 161 | 0 |
Shareholders’ Equity | ||
Common stock | 402 | 402 |
77 | 20 | |
$ 792 | $ 541 |
RED, INCORPORATED | ||
---|---|---|
Statement of Income | ||
For Year Ended December 31, 2024 | ||
($ in millions) | ||
Revenues | ||
Sales revenue | $ 2,010 | |
Expenses | ||
Cost of goods sold | $ 1,439 | |
Depreciation expense | 41 | |
Operating expenses | 421 | 1,901 |
Net income | $ 109 |
Additional information from the accounting records:
- During 2024, $212 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
- In order to maintain the usual policy of paying cash dividends of $52 million, it was necessary for Red to borrow $52 million from its bank.
Required:
Prepare the statement of cash flows of Red, Incorporated, for the year ended December 31, 2024, using the direct method to report operating activities.
Note: Enter your answers in millions (i.e., 10,000,000 should be entered as 10).
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