6 The following are the summary account balances from a recent statement of financial position of Modern Sportswear Inc. at December 31, 2020. The accounts are followed by a list of transactions for the month of January 2021. All amounts are shown in millions of dollars: 45 points Cash Long-term borrowings Accounts receivable Inventories Other non-current liabilities Property and equipment, net The accounts have normal debit or credit balances. The following additional information is also available: 660 Accounts payable 2,354 Income tax payable $1,897 350 1,578 Prepaid expenses 21 601 Retained earnings 2,643 Other non-current assets 11,384 Contributed capital 4,621 1,201 3,588 a Purchased new equipment costing $200 by issuing long-term debt. b. Received $950 on Accounts receivable. c Received and paid the telephone bills for $1. d. Earned $575 in sales to customers on account; the cost of sales was $325. e Paid employees $125 for wages earned in January. Paid half of the income taxes payable. g. Purchased inventory for $298 on account. h. Prepaid rent for February for a warehouse for $17. Paid $15 of long-term borrowings and $3 in interest on the debt. Purchased a patent (an intangible asset) for $13 cash. 6 Required: 1&2. Post the above transactions in to the appropriate T-accounts. 45 points 01:18:12 Beg. bal. End. bal. Cash Accounts Receivable Beg. bal End. bal. Inventories Prepaid Expenses Beg. bal. Beg. bal. End. bal. End. bal. Property and Equipment, net Other Non-current Assets Beg. bal Beg bal End. bal. End. bal. 45 points 01:17:48 End Da Beg bal End. bal. Patents End. Dai Accounts Payable Beg. bal. End. bal. Income Tax Payable Long-term Borrowings Beg. bal Beg. bal End, bal End, bal, Other Non-Current Liabilities Contributed Capital Beg. bal Beg. bal. End. bal. End. bal Retained Earnings Sales Revenue Beg. bal Beg. bal. End, bal End. bal. 6 45 points 03 01:17:10 Beg bal. End. bal. Cost of Sales Wages Expense Beg. bal End, bal Utilities Expense Interest Expense Beg. bal Beg. bal End. bal. End. bal. 3. Show the effects of each transaction on net earnings and cash. (Enter any decreases to account balances with a minus sign.) Transaction Effect on Net Earnings Effect on Cash B. b. C d. 8. f. 9 45 6 J. points 01:16:41 4-a. Prepare a statement of earnings for the month of January 2021. MODERN SPORTSWEAR INC. Statement of Earnings For the Month Ended January 31, 2021 (in millions of dollars) Revenues: Operating expenses: Total operating expenses Other income and expenses: Total expenses 6 45 points 01:16:21 4-b. Prepare a classified statement of financial position as at January 31, 2021. MODERN SPORTSWEAR INC. Statement of Financial Position As at January 31, 2021 (in millions of dollars) Current assets: Total current assets Assets Total assets Liabilities and Shareholders' Equity Current liabilities: Total current liabilities Current liabilities: Total current liabilities Total liabilities Shareholders' Equity Total shareholders' equity Total liabilities and shareholders' equity