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.

RED, INC. Comparative Balance Sheets December 31, 2016 and 2015 ($ in millions)
	2016			2015
Assets
Cash	$	34		$	121
Accounts receivable		180			142
Prepaid insurance		12			6
Inventory		250			185
Buildings and equipment		420			360
Less: Accumulated depreciation		(129	)		(250	)
	$	767		$	564
Liabilities
Accounts payable	$	97		$	120
Accrued expenses payable		11			14
Notes payable		60			0
Bonds payable		121			0
Shareholders Equity
Common stock		410			410
Retained earnings		68			20
	$	767		$	564

RED, INC. Statement of Income For Year Ended December 31, 2016 ($ in millions)
Revenues
Sales revenue				$	2,100
Expenses
Cost of goods sold	$	1,400
Depreciation expense		41
Operating expenses		551			1,992
Net income				$	108

Additional information from the accounting records:

a.	During 2016, $240 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.

b.	In order to maintain the usual policy of paying cash dividends of $60 million, it was necessary for Red to borrow $60 million from its bank.

Required:

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