Question

Comparative balance sheets for 2011 and 2010, a statement of income for 2011, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:
a. During 2011, $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, Inc., for the year ended December 31, 2011. Present cash flows from operating activities by the direct method.



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  • CreatedJuly 11, 2013
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