Question

The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given below for Arduous Company. Additional information from Arduous’s accounting records is provided also.

ARDUOUS COMPANY Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	2018				2017
Assets
Cash	$	120			$	87
Accounts receivable		196				206
Investment revenue receivable		14				10
Inventory		212				206
Prepaid insurance		12				19
Long-term investment		176				131
Land		208				156
Buildings and equipment		418				412
Less: Accumulated depreciation		(103)				(132)
Patent		36				40
	$	1,289			$	1,135
Liabilities
Accounts payable	$	56			$	77
Salaries payable		14				22
Bond interest payable		16				10
Income tax payable		18				21
Deferred income tax liability		23				14
Notes payable		26				0
Lease liability		80				0
Bonds payable		221				287
Less: Discount on bonds		(28)				(30)
Shareholders’ Equity
Common stock		448				416
Paid-in capital—excess of par		107				91
Preferred stock		81				0
Retained earnings		242				227
Less: Treasury stock		(15)				0
	$	1,289			$	1,135

ARDUOUS COMPANY Income Statement For Year Ended December 31, 2018 ($ in millions)
Revenues and gain:
Sales revenue	$	452
Investment revenue		20
Gain on sale of treasury bills		4		$	476
Expenses and loss:
Cost of goods sold		186
Salaries expense		79
Depreciation expense		12
Patent amortization expense		4
Insurance expense		13
Bond interest expense		34
Loss on machine damage		27
Income tax expense		42			397
Net income				$	79

Additional information from the accounting records:

1. Investment revenue includes Arduous Company’s $14 million share of the net income of Demur Company, an equity method investee.
2. Treasury bills were sold during 2018 at a gain of $4 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
3. A machine originally costing $82 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $14 million.
4. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $9 million.
5. The preferred stock of Tory Corporation was purchased for $31 million as a long-term investment.
6. Land costing $52 million was acquired by issuing $26 million cash and a 12%, four-year, $26 million note payable to the seller.
7. The right to use a building was acquired with a 15-year lease agreement; present value of lease payments, $88 million. Annual lease payments of $8 million are paid at the beginning of each year starting January 1, 2018.
8. $66 million of bonds were retired at maturity.
9. In February, Arduous issued a stock dividend (6.4 million shares). The market price of the $5 par value common stock was $7.50 per share at that time. Also the company paid a cash dividend.
10. In April, 1 million shares of common stock were repurchased as treasury stock at a cost of $15.00 million.

Required:
Prepare the statement of cash flows of Arduous Company for the year ended December 31, 2018. Present cash flows from operating activities by the direct method. (Do not round your intermediate calculations. 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.)

Please help me finish

Answer is not complete. ARDUOUS COMPANY Statement of Cash Flows For year ended December 31, 2018 (5 in millions) Cash inflows From customers From investment revenue From sale of cash equivalents Cash outflows To suppliers of goods To employees For insurance For bond interest For income taxes Net cash flows from operating activities Cash flows from investing activities Sale of machine components Purchase of long-term investment Purchase of land - cash portion Net cash flows from investing activities Cash flows from financing activities Retirement of bonds payable Sale of preferred stock Payment of cash dividends Purchase of treasury stock 000000000000000000 0 Net cash flows from financing activities Net increase in cash Cash balance, January 1 Cash balance, December 31 Noncash investing and financing activities 50

Answer 1

462 Arduous Company Statement of Cash Flows For year ended December 31, 2018($ in millions) Cash flows from operating activities: Cash inflows: From customers From investment revenue From sale of cash equivalents Cash outflows: To suppliers of goods To employees For insurance For bond interest For income taxes Net cash flows from operating activities - 213 - 87 - 6 - 26 - 36 100 14 Cash flows from investing activities: Sale of machine components Purchase of long-term investment Purchase of land Net cash flows from investing activities - 31 - 26 43 - 66 Cash flows from financing activities: Retirement of bonds payable Retirement of lease liability Sale of preferred stock Payment of cash dividends Purchase of treasury stock Net cash flows from financing activities Net increase in cash Cash balance, January 1 Cash balance, December 31 120 Noncash investing and financing activities: Acquired land with cash and note acquired building with lease 26 88

206 *Working note: collection from customer Accounts receivable, at beg Add : sales Accounts receivable, at end collection from customer 452 Payment to employees Salaries payable, at beg Add: salaries expense Less: Salaries payable, at end Payment to employees - 196 Payment for Income tax Income tax payable,,at beg Add : Income tax expense Less : Income tax payable,,at end Add :Deferred income tax liability, at beg Less :Deferred income tax liability, at end Payment for Income tax 462 1871 14 |- 23 36 Payment for insurance Prepaid insurance, at end Add : Insurance expense Less: Prepaid insurance, at beg Payment for insurance 227 cash received From investment revenue Investment revenue receivable, at beg Add : Investment revenue Less: share of net income Investment revenue receivable, at end | cash received From investment revenue | calculation of cash dividend paid Retained earning, Dec 31, 2017 Add: net income Less: stock dividend (6.4*7.5) Less : Retained earning, Dec 31, 2018 Cash dividend paid 14 2 Payment to supplier 10 Accounts payable, at beg Add: cost of goods sold Less :Accounts payable, at end Less :Inventory, at beg Add : Inventory, at end Payment to supplier Payment for Bond interest Bond interest payable, at beg Add : Bond interest expense Less : Bond interest payable, at end Add: Discount on bonds, at end Less : Discount on bonds, at beg Payment for Bond interest - 206 212 213 Sheet363 Sheet364 Sheet365 Sheet366 Sheet367 Sheet368 Sheet369 Sheet370 Sheet371 / 1 ►N A ENG UK 11:36 27/11/2019