Exercise 21-27 Statement of cash flows; direct method [LO21-3, 21-5, 21-6, 21-8]

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	2018				2017
Assets
Cash	$	35			$	134
Accounts receivable		200				143
Prepaid insurance		5				3
Inventory		307				186
Buildings and equipment		422				361
Less: Accumulated depreciation		(130	)			(251	)
	$	839			$	576
Liabilities
Accounts payable	$	98			$	122
Accrued expenses payable		4				9
Notes payable		61				0
Bonds payable		173				0
Shareholders Equity
Common stock		411				411
Retained earnings		92				34
	$	839			$	576

RED, INC. Statement of Income For Year Ended December 31, 2018
($ in millions)
Revenues
Sales revenue				$	2,110
Expenses
Cost of goods sold	$	1,424
Depreciation expense		41
Operating expenses		526			1,991
Net income				$	119

Additional information from the accounting records:

1. During 2018, $241 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 $61 million, it was necessary for Red to borrow $61 million from its bank.

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