Intermediate Accounting 2 ass 5 P 21-11-14

P 21-11 Prepare a statement of cash flows: direct method

ARDUOUS COMPANY

Statement of Cash Flows

For year ended December 31, 2011 ($ in millions)

Cash flows from operating activities:

Cash inflows:

From customers                                                                       $414

From investment revenue                                                              3

From sale of cash equivalents                                                       2

Cash outflows:

To suppliers of goods                                                              (200)

To employees                                                                            (78)

For insurance                                                                               (3)

For bond interest                                                                       (21)

For income taxes                                                                       (35)

Net cash flows from operating activities                                                 $ 82

Cash flows from investing activities:

Sale of machine components                                                     17

Purchase of long-term investment                                            (25)

Purchase of land                                                                        (23)

Net cash flows from investing activities                                                   (31)

Cash flows from financing activities:

Retirement of bonds payable                                                    (60)

Sale of preferred stock                                                               75

Payment of cash dividends                                                       (22)

Purchase of treasury stock                                                          (9)

Net cash flows from financing activities                                                   (16)

Net increase in cash 35

Cash balance, January 1                                                                             81

Cash balance, December 31                                                                    $116

Noncash investing and financing activities:

Acquired $82 million building by 15-year lease.

Acquired $46 million of land by issuing cash and a 15%, 4-year note as follows:

Cost of land                                                                $46

Cash paid                                                                      23

Note issued                                                                 $23

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