Chapter 21 Graded Problems instructions | help 2. value: 25.00 points Problem 21-18 Statement of cash flows; indirect method [LO21-4, 21-8] The comparative balance sheets for 2013 and 2012 and the income statement for 2013 are given below for Arduous Company. Additional information from Arduouss accounting records is provided also. ARDUOUS COMPANY Comparative Balance Sheets December 31, 2013 and 2012 ($ in millions) 2013 2012 Assets Cash $ 116 $ 81 Accounts receivable 190 194 Investment revenue receivable 6 4 Inventory 205 200 Prepaid insurance 4 8 Long-term investment 156 125 Land 196 150 Buildings and equipment 412 400 Less: Accumulated depreciation (97) (120) Patent 30 32 $ 1,218 $ 1,074 Liabilities Accounts payable $ 50 $ 65 Salaries payable 6 11 Bond interest payable 8 4 Income tax payable 12 14 Deferred income tax liability 11 8 Notes payable 23 0 Lease liability 82 0 Bonds payable 215 275 Less: Discount on bonds (22) (25) Shareholders Equity Common stock 430 410 Paid-in capitalexcess of par 95 85 Preferred stock 75 0 Retained earnings 242 227 Less: Treasury stock (9) 0 $ 1,218 $ 1,074 ARDUOUS COMPANY Income Statement For Year Ended December 31, 2013 ($ in millions) Revenues Sales revenue $ 410 Investment revenue 11 Gain on sale of treasury bills 2 $ 423 Expenses Cost of goods sold 180 Salaries expense 73 Depreciation expense 12 Patent amortization expense 2 Insurance expense 7 Bond interest expense 28 Extraordinary loss (flood) $ 18 Less: Tax savings (9) 9 Income tax expense 45 356 Net income $ 67 Additional information from the accounting records: a. During 2011, $6 million of customer accounts were written off as uncollectible. b. Investment revenue includes Arduous Companys $6 million share of the net income of Demur Company, an equity method investee. c. Treasury bills were sold during 2013 at a gain of $2 million. Arduous Company classifies its investments in Treasury bills as cash equivalents. d. A machine originally costing $70 million that was one-half depreciated was rendered unusable by a rare flood. Most major components of the machine were unharmed and were sold for $17 million. e. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $3 million. f. The preferred stock of Tory Corporation was purchased for $25 million as a long-term investment. g. Land costing $46 million was acquired by issuing $23 million cash and a 15%, four-year, $23 million note payable to the seller. h. A building was acquired by a 15-year capital lease; present value of lease payments, $82 million. i. $60 million of bonds were retired at maturity. j. In February, Arduous issued a 4% stock dividend (4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time. Also the company paid a cash dividend. k. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $9 million. Required: Prepare the statement of cash flows for Arduous Company using the indirect method. (Do not round your intermediate calculations. Enter your answers in millions (i.e., 10,000,000 should be entered as 10.) . Amounts to be deducted should be indicated with a minus sign.)