Refer to the data provided in E21-27 for Red. Inc.

Required:

Prepare the statement of cash flows for Red, Inc.. using the indirect method to report operating activities.

E21-27:

Comparative balance sheets for 2016 and 2015. a statement of income for 2016. and additional information from the accounting records of Red. Inc.. are provided below.

Additional information from the accounting records:

During 2016. $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.

Transcribed Image Text:

Assots Cash RED, INC. Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions) 2016 Accounts receivable Prepaid insurance Inventory Buildings and equipment Loss: Accumulated depreciation Liabilities Accounts payable Accrued expenses payable Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings $ 24 178 7 285 400 (119) Revenues Sales revenue Expenses Cost of goods sold Depreciation expense Operating expenses Net income $775 $ 87 6 50 160 400 72 $775 RED, INC. Statement of Income For Year Ended December 31, 2016 ($ in millions) $1,400 50 447 2015 $110 132 3 175 350 (240) $530 $100 11 400 19 $530 $2,000 1,897 $ 103 Assots Cash RED, INC. Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions) 2016 Accounts receivable Prepaid insurance Inventory Buildings and equipment Loss: Accumulated depreciation Liabilities Accounts payable Accrued expenses payable Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings $ 24 178 7 285 400 (119) Revenues Sales revenue Expenses Cost of goods sold Depreciation expense Operating expenses Net income $775 $ 87 6 50 160 400 72 $775 RED, INC. Statement of Income For Year Ended December 31, 2016 ($ in millions) $1,400 50 447 2015 $110 132 3 175 350 (240) $530 $100 11 400 19 $530 $2,000 1,897 $ 103

Answer rating: 100% (QA)

Cash flows from operating activities indirect method Cash flows from operating activities These are ... View the full answer