PREPARE A STATEMENT OF CASH FLOWS USING DIRECT METHOD

RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) 2017 2018 Assets Cash Accounts receivable Prepaid insurance Inventory Equipment Less: Accumulated depreciation 60 (12) (19) $ 141 $ 144 $ 15 $ 13 Liabilities Accounts payable Salaries payable Bond payable 30 30 Shareholders' Equity Common stock Paid-in-capital--excess of par Retained earnings 25 3050 16 $ 141 $ 144 RED, INC. Income Statement For Year Ended December 31, 2018 ($ in millions) Revenues Sales revenue $ 150 Expenses Cost of goods sold $ 65 Depreciation expense Insurance expense Interest expense Salaries expense Operating expenses 25 135 Net income $ 15