Reference no: EM132506631

The comparative balance sheets for 2018 and 2017 and the statement of income for 2018 are given below for National Intercable Company. Additional information from NIC's accounting records is provided also.

NATIONAL INTERCABLE COMPANY

Comparative Balance Sheets

December 31, 2018 and 2017

($ in millions)                                2018                       2017

Assets

Cash                                          $174                   $155

Accounts receivable                        463                    455

Less:

Allowance for uncollectible accounts   (10)                  (8)

Prepaid insurance                            8                     16

Inventory                                     443                     435

Long-term investment                          86                135

Land                                               300                  300

Buildings and equipment                     424                     400

Less: Accumulated depreciation         (166)                    (145)

Trademark                                         36                          40

                                                    $1,758                     $1,783

Liabilities Accounts payable                $55                         $78

Salaries payable                                    6                          9

Deferred income tax liability                  25                         20

Lease liability                                   109                            0

Bonds payable                            185                                  345

Less: Discount on bonds                   (33)                          (40)

Shareholders' Equity Common stock   420                            400

Paid-in capital-excess of par             170                             150

Preferred stock                                 50                               0

Retained earnings                             771                           821

                                                   $1,758                       $1,783

NATIONAL INTERCABLE COMPANY

Income Statement

For Year Ended December 31, 2018

($ in millions)Revenues

Sales revenue$650

Investment revenue 18

Gain on sale of investments 7 $675

Expenses Cost of goods sold 290

Salaries expense 82

Depreciation expense 45

Trademark amortization expense 4

Bad debt expense 7

Insurance expense 48

Bond interest expense 60

Loss on building fire 67 603

Income before tax 72

Income tax expense 58

Net income $14

Additional information from the accounting records:

1. Investment revenue includes National Intercable Company's $9 million share of the net income of Central Fiber Optics Corporation, an equity method investee.
2. A long-term investment in bonds, originally purchased for $58 million, was sold for $65 million.
3. Pretax accounting income exceeded taxable income causing the deferred income tax liability to increase by $5 million.
4. A building that originally cost $96 million, and which was one-fourth depreciated, was destroyed by fire. Some undamaged parts were sold for $5 million.
5. The right to use a building was acquired with a seven-year lease agreement; present value of lease payments, $120 million. Annual lease payments of $11 million are paid at Jan. 1 of each year starting in 2018.
6. $160 million of bonds were retired at maturity.
7. $20 million par value of common stock was sold for $40 million, and $50 million of preferred stock was sold at par.
8. Shareholders were paid cash dividends of $64 million.

Required:

Question 1: Prepare the statement of cash flows. Present cash flows from operating activities by the direct method. (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