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 2020 Assets Cash 28 114 Accounts receivable 184 136 Prepaid insurance 13 8 Inventory 250 179 Buildings and equipment 451 354 Less: Accumulated depreciation (123) (244) Total 803 547 Liabilities Accounts payable 93 108 Accrued liabilities 12 18 Notes payable 54 0 Bonds payable 172 0 Shareholders’ Equity Common stock 404 404 Retained earnings 68 17 Total 803 547 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in millions) Revenues Sales revenue 2,020 Expenses Cost of goods sold 1,414 Depreciation expense 41 Operating expenses 460 1,915 Net income 105 Additional information from the accounting records: During 2021, $277 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 $54 million, it was necessary for Red to borrow $54 million from its bank. Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below. RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash 28 114 Accounts receivable 184 136 Prepaid insurance 13 8 Inventory 250 179 Buildings and equipment 451 354 Less: Accumulated depreciation (123) (244) Total 803 547 Liabilities Accounts payable 93 108 Accrued liabilities 12 18 Notes payable 54 0 Bonds payable 172 0 Shareholders’ Equity Common stock 404 404 Retained earnings 68 17 Total 803 547 RED, INC. Statement of Income For Year Ended December 31, 2021 ($ in millions) Revenues Sales revenue 2,020 Expenses Cost of goods sold 1,414 Depreciation expense 41 Operating expenses 460 1,915 Net income 105 Additional information from the accounting records: During 2021, $277 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 $54 million, it was necessary for Red to borrow $54 million from its bank. Required: Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter21: The Statement Of Cash Flows
Section: Chapter Questions
Problem 13P: Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and...
Related questions
Question
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below.
RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) |
||
2021 | 2020 | |
Assets | ||
Cash | 28 | 114 |
Accounts receivable | 184 | 136 |
Prepaid insurance | 13 | 8 |
Inventory | 250 | 179 |
Buildings and equipment | 451 | 354 |
Less: |
(123) | (244) |
Total | 803 | 547 |
Liabilities | ||
Accounts payable | 93 | 108 |
Accrued liabilities | 12 | 18 |
Notes payable | 54 | 0 |
Bonds payable | 172 | 0 |
Shareholders’ Equity | ||
Common stock | 404 | 404 |
68 | 17 | |
Total | 803 | 547 |
RED, INC. Statement of Income For Year Ended December 31, 2021 |
||
($ in millions) | ||
Revenues | ||
Sales revenue | 2,020 | |
Expenses | ||
Cost of goods sold | 1,414 | |
Depreciation expense | 41 | |
Operating expenses | 460 | 1,915 |
Net income | 105 |
Additional information from the accounting records:
- During 2021, $277 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 $54 million, it was necessary for Red to borrow $54 million from its bank.
Required:
Prepare the statement of cash flows of Red, Inc., using the direct method to report operating activities. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10). Amounts to be deducted should be indicated with a minus sign.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning