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
Assets cash
Accounts receivable
Prepaid insurance
Inventory
Buildings and equipment
Less: Accumulated depreciation
Liabilities
Accounts payable
Accrued liabilities
Notes payable
Bonds payable
Shareholders' Equity
Common stock
Retained earnings
24
178
7
285
400
(119 )
$ 775
$ 87
6
50
160
400
72
$ 775
2023
$ 110
132
3
175
350
(240 )
530
$ 100
11
400
19
$ 530
RED, INCORPORATED
Statement of Income
For Year Ended December 31, 2024
(s in millions
Revenues
Sales revenue
Expenses
Cost of goods sold
Depreciation expense
Operating expenses
Net income
$ 1,400
50
447
$ 2,000
1,897
$ 103
Additional information from the accountina 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 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: Additional information from the accountina records: dditional information from the accounting records: a. During 2024,$230 million of equipment was purchased to replace $180 million of equipment ( 95% depreciated) sold at book value. b. 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 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
