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	$	26		$	114
Accounts receivable		203			134
Prepaid insurance		11			6
Inventory		289			177
Buildings and equipment		384			352
Less: Accumulated depreciation		(121	)		(242	)
	$	792		$	541
Liabilities
Accounts payable	$	90		$	104
Accrued expenses payable		10			15
Notes payable		52			0
Bonds payable		161			0
Shareholders Equity
Common stock		402			402
Retained earnings		77			20
	$	792		$	541

RED, INC. Statement of Income For Year Ended December 31, 2016 ($ in millions)
Revenues
Sales revenue				$	2,010
Expenses
Cost of goods sold	$	1,439
Depreciation expense		41
Operating expenses		421			1,901
Net income				$	109

Additional information from the accounting records:

a.	During 2016, $212 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 $52 million, it was necessary for Red to borrow $52 million from its bank.

Required:

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