Refer to the data provided in E 21–27 for Red, Inc.

Required:
Prepare the statement of cash flows (direct method) for Red, Inc. Use the T-account method to assist in your analysis.

E 21–27

RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 (S in millions) 2021 2020 Assets $ 24 $ 110 132 Cash Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation 178 7 3 285 175 400 350 (119) (240) $ 775 $ 530 Liabilities $ 87 Accounts payable Accrued liabilities $100 11 6 Notes payable Bonds payable 50 160 Shareholders' Equity Common stock Retained earnings 400 400 19 72 $ 775 $ 530