Exercise 21-27 (Algo) Statement of cash flows; direct method [LO21-3, 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)
	2024	2023
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 liabilities	10	15
Notes payable	52	0
Bonds payable	161	0
Shareholders Equity
Common stock	402	402
Retained earnings	77	20
	$ 792	$ 541

RED, INCORPORATED
Statement of Income
For Year Ended December 31, 2024
($ 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:

1. During 2024, $212 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value.
2. 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, 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.