Comparative balance sheets for 2013 and 2012, a statement of income for 2013, and additional information from the accounting records of Red, Inc., are provided below.

Additional information from the accounting records:
a. During 2013, $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, 2013. Present cash flows from operating activities by the direct method. (You may omit the schedule to reconcile net income with cash flows from operatingactivities.)

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RED, INC. Comparative Balance Sheets December 31, 2013 and 2012 ($ in millions) 2013 2012 Assets Cash Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation S 24 178 285 400 (119) $775 S110 132 3 175 350 (240) $530 Liabilities Accounts payable S 87 6 50 160 $100 Accrued ex Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings s payable 0 400 72 $775 400 19 $530 RED, INC. Statement of Income For Year Ended December 31, 2013 ($ in millions) Revenues Sales revenue Expenses Cost of goods sold Depreciation expense Operating expenses Net income $2,000 $1,400 50 447 1,897 $ 103