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The comparative balance sheets for 2018 and 2017 and the income statement for 2018 are given...

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 $ 149 $ 101
Accounts receivable 210 234
Investment revenue receivable 27 24
Inventory 228 220
Prepaid insurance 25 33
Long-term investment 217 145
Land 236 170
Buildings and equipment 432 440
Less: Accumulated depreciation (118 ) (160 )
Patent 52 55
$ 1,458 $ 1,262
Liabilities
Accounts payable $ 70 $ 105
Salaries payable 27 38
Bond interest payable 29 24
Income tax payable 32 40
Deferred income tax liability 51 28
Notes payable 33 0
Lease liability 95 0
Bonds payable 235 315
Less: Discount on bonds (42 ) (50 )
Shareholders’ Equity
Common stock 490 430
Paid-in capital—excess of par 135 105
Preferred stock 95 0
Retained earnings 237 227
Less: Treasury stock (29 ) 0
$ 1,458 $ 1,262
ARDUOUS COMPANY
Income Statement
For Year Ended December 31, 2018
($ in millions)
Revenues and gain:
Sales revenue $ 600
Investment revenue 31
Gain on sale of treasury bills 3 $ 634
Expenses and loss:
Cost of goods sold 200
Salaries expense 93
Depreciation expense 13
Patent amortization expense 3
Insurance expense 27
Bond interest expense 48
Loss on machine damage 33
Income tax expense 56 473
Net income $ 161


Additional information from the accounting records:

  1. Investment revenue includes Arduous Company’s $27 million share of the net income of Demur Company, an equity method investee.
  2. Treasury bills were sold during 2018 at a gain of $3 million. Arduous Company classifies its investments in Treasury bills as cash equivalents.
  3. A machine originally costing $110 million that was one-half depreciated was rendered unusable by a flood. Most major components of the machine were unharmed and were sold for $22 million.
  4. Temporary differences between pretax accounting income and taxable income caused the deferred income tax liability to increase by $23 million.
  5. The preferred stock of Tory Corporation was purchased for $45 million as a long-term investment.
  6. Land costing $66 million was acquired by issuing $33 million cash and a 15%, four-year, $33 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, $102 million. Annual lease payments of $7 million are paid at the beginning of each year starting January 1, 2018.
  8. $80 million of bonds were retired at maturity.
  9. In February, Arduous issued a stock dividend (12.0 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 $29.00 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.)

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