Question

The comparative balance sheets for 2021 and 2020 and the income statement for 2021 are given below for Arduous Company. Additional Information from Arduous's accounting records is provided also. ARDUOUS COMPANY Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) 2021 2020 Assets Cash Accounts receivable Investment revenue receivable Inventory Prepaid insurance Long-term investment Land Buildings and equipment Less: Accumulated depreciation Patent $ 126 201 17 219 15 189 219 430 (107) 42 $1,351 $ 92 216 15 211 23 136 161 422 (142) 45 $1,179 $ $ Liabilities Accounts payable Salaries payable Interest payable (bonds) Income tax payable Deferred tax liability Notes payable Lease liability Bonds payable Less: Discount on bonds Shareholders' Equity Common stock Paid-in capital-excess of par Preferred stock Retained earnings Less: Treasury stock 61 17 19 23 33 29 93 226 (33) 87 31 15 30 19 297 (38) 421 96 463 117 86 237 (20) $1,351 221 $1,179

Answer 1

ARDUOUS COMPANY
Statement of Cash Flows
For Year Ended December 31, 2021
($ in millions)
Cash flows from operating activities
Net Income	126
Adjustment for noncash effects:
Depreciation expense	11
Amortization Expense	3
Loss on equipment damage	24
Amortization of discounts	5
Changes in current assets and current liabilities
Increase in investment due to equity method income	(17)
Decrease in accounts receivable	15
Increase in investment revenue receivable	(2)
Increase in inventory	(8)
Decrease in prepaid insurance	8
Decrease in accounts payable	(26)
Decrease in salaries payable	(14)
Increase in interest payable	4
Decrease in income tax payable	(7)
Increase in deferred tax liability	14
Net cash provided by operating activities		136
Cash flows from investing activities
Purchase of land	(29)
Purchase of long-term investment	(36)
Sale of machine components	22
Net cash used by investing activities		(43)
Cash flows from financing activities
Purchase of treasury stock	(20)
Payment of dividends	(47)
Retirement of bonds payable	(71)
Sale of preferred stock	86
Payment of lease liability	(7)
Net cash used by financing activities		(59)
Net increase in cash		34
Cash balance January 1		92
Cash balance December 31		126
Noncash investing and financing activities:
Land acquired by issuing note payable	29
Right to use building acquired	100