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 $ 24 $ 110 Accounts receivable 178 132 Prepaid insurance 7 3 Inventory 285 175 Buildings and equipment 400 350 Less: Accumulated depreciation (119) (240) $775 $ 530 Liabilities Accounts payable $ 87 $ 100 Accrued liabilities 6 11 Notes payable 500 Bonds payable 1600 Shareholders' Equity Common stock 400 400 Retained earnings 72 19 $ 775 $ 530 RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Revenues Sales revenue $2,000 Expenses Cost of goods sold $ 1,400 Depreciation expense 50 Operating expenses 447 1,897 Net income $ 103 Additional information from the accounting records: During 2024, $230 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $50 million, it was necessary for Red to borrow $50 million from its bank. Required: Prepare the statement of cash flows for Red, Incorporated, using the indirect method to report operating activities. Note: Cash outflows should be indicated with a minus sign. Enter your answers in millions (i.e ., 10,000,000 should be entered as 10).
Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below: RED, INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) 2024 2023 Assets Cash $ 24 $ 110 Accounts receivable 178 132 Prepaid insurance 7 3 Inventory 285 175 Buildings and equipment 400 350 Less: Accumulated depreciation (119) (240) $775 $ 530 Liabilities Accounts payable $ 87 $ 100 Accrued liabilities 6 11 Notes payable 500 Bonds payable 1600 Shareholders' Equity Common stock 400 400 Retained earnings 72 19 $ 775 $ 530 RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Revenues Sales revenue $2,000 Expenses Cost of goods sold $ 1,400 Depreciation expense 50 Operating expenses 447 1,897 Net income $ 103 Additional information from the accounting records: During 2024, $230 million of equipment was purchased to replace $180 million of equipment (95% depreciated) sold at book value. In order to maintain the usual policy of paying cash dividends of $50 million, it was necessary for Red to borrow $50 million from its bank. Required: Prepare the statement of cash flows for Red, Incorporated, using the indirect method to report operating activities. Note: Cash outflows should be indicated with a minus sign. Enter your answers in millions (i.e ., 10,000,000 should be entered as 10).
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 10P: Comprehensive: Balance Sheet from Statement of Cash Flows Mills Company prepared the following...
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Transcribed Image Text:Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional
information from the accounting records of Red, Incorporated, are provided below: RED,
INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) 2024 2023
Assets Cash $ 24 $ 110 Accounts receivable 178 132 Prepaid insurance 7 3 Inventory 285 175 Buildings and
equipment 400 350 Less: Accumulated depreciation (119) (240) $775 $ 530 Liabilities Accounts payable $
87 $ 100 Accrued liabilities 6 11 Notes payable 500 Bonds payable 1600 Shareholders' Equity Common
stock 400 400 Retained earnings 72 19 $ 775 $ 530 RED, INCORPORATED Statement of Income For Year
Ended December 31, 2024 ($ in millions) Revenues Sales revenue $2,000 Expenses Cost of goods sold $
1,400 Depreciation expense 50 Operating expenses 447 1,897 Net income $ 103 Additional information
from the accounting records: During 2024, $230 million of equipment was purchased to replace $180
million of equipment (95% depreciated) sold at book value. In order to maintain the usual policy of paying
cash dividends of $50 million, it was necessary for Red to borrow $50 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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