Exercise $21-27($Algo$)$ Statement of cash flows; direct method $[$LO$21-3,21-5,21-6,21-8]$

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$)$

$20242023$

Assets

Cash $ $28$ $ $114$

Accounts receivable $184136$

Prepaid insurance $138$

Inventory $250179$

Buildings and equipment $451354$

Less: Accumulated depreciation $(123)(244)$

$ $803$ $ $547$

Liabilities

Accounts payable $ $93$ $ $108$

Accrued liabilities $1218$

Notes payable $540$

Bonds payable $1720$

Shareholders$$ Equity

Common stock $404404$

Retained earnings $6817$

$ $803$ $ $547$

RED, INCORPORATED

Statement of Income

For Year Ended December $31,2024$

$($$ in millions$)$

Revenues

Sales revenue $ $2,020$

Expenses

Cost of goods sold $ $1,414$

Depreciation expense $41$

Operating expenses $4601,915$

Net income $ $105$

Additional information from the accounting records:

During $2024,$ $$277$ million of equipment was purchased to replace $$180$ million of equipment $(90\%$ depreciated$)$ sold at book value.

In order to maintain the usual policy of paying cash dividends of $$54$ million, it was necessary for Red to borrow $$54$ 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.