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Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided
Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.
RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions) | |||||||
2018 | 2017 | ||||||
Assets | |||||||
Cash | $ | 17.4 | $ | 169.9 | |||
Accounts receivable | 173.0 | 119.0 | |||||
Prepaid insurance | 11.6 | 7.6 | |||||
Inventory | 264.0 | 128.0 | |||||
Buildings and equipment | 444.0 | 368.0 | |||||
Less: Accumulated depreciation | (122.0 | ) | (258.0 | ) | |||
$ | 788.0 | $ | 534.5 | ||||
Liabilities | |||||||
Accounts payable | $ | 75.0 | $ | 91.5 | |||
Accrued expenses payable | 13.0 | 16.0 | |||||
Notes payable | 100.0 | 0.0 | |||||
Bonds payable | 105.0 | 0.0 | |||||
Shareholders Equity | |||||||
Common stock | 400.0 | 400.0 | |||||
Retained earnings | 95.0 | 27.0 | |||||
$ | 788.0 | $ | 534.5 | ||||
RED, INC. Statement of Income For Year Ended December 31, 2018 | ||||||
($ in millions) | ||||||
Revenues | ||||||
Sales revenue | $ | 3,000.0 | ||||
Expenses | ||||||
Cost of goods sold | $ | 2,160.0 | ||||
Depreciation expense | 35.0 | |||||
Operating expenses | 637.0 | 2,832.0 | ||||
Net income | $ | 168.0 | ||||
Additional information from the accounting records:
- During 2018, $256.0 million of equipment was purchased to replace $180.0 million of equipment (95.0% depreciated) sold at book value.
- In order to maintain the usual policy of paying cash dividends of $100.0 million, it was necessary for Red to borrow $100.0 million from its bank
- Prepare the T-account for Red, Inc. (Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
Required: Prepare the statement of cash flows (direct method, for Red, Inc. Use the Taccount method to assist in your analysis. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (1.e., 5.500.000 should be entered as 5.5).) RED, INC. Statement of Cash Flows For year ended December 31, 2018 ($ in millions) Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 Required: Prepare the T-account for Red, Inc. (Enter your answers in millions rounded to 1 decimal place (I.e., 5.500.000 should be entered as 5.5).) Cash (Statement of Cash Flows) Beg. Bal. Operating Activities: Investing Activities: Financing Activities: End. Bal. Accounts Receivable Prepaid Insurance Beg. Bal Beg. Bal End. Bal End. Bal Inventory Buildings and Equipment Beg. Bal Beg. Bal End. Bal End. Bal Accumulated Depreciation Accounts Payable Beg. Bal Beg. Bal End. Bal End. Bal Accrued Expenses Payable Notes Payable Beg. Bal Beg. Bal End. Bal End. Bal Bonds Payable Beg. Bal Beg. Bal End. Bal End. Bal Cost of Goods Sold Depreciation Expense Beg. Bal Beg. Bal End. Bal End. Bal Operating Expenses Net Income (Income Summary) Beg. Bal Beg Bal End. Bal End. Bal Retained Earnings Beg. Bal Required: Prepare the statement of cash flows (direct method, for Red, Inc. Use the Taccount method to assist in your analysis. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in millions rounded to 1 decimal place (1.e., 5.500.000 should be entered as 5.5).) RED, INC. Statement of Cash Flows For year ended December 31, 2018 ($ in millions) Cash flows from operating activities: Cash inflows: Cash outflows: Net cash flows from operating activities Cash flows from investing activities: Net cash flows from investing activities Cash flows from financing activities: Net cash flows from financing activities Net increase (decrease) in cash Cash balance, January 1 Cash balance, December 31 Required: Prepare the T-account for Red, Inc. (Enter your answers in millions rounded to 1 decimal place (I.e., 5.500.000 should be entered as 5.5).) Cash (Statement of Cash Flows) Beg. Bal. Operating Activities: Investing Activities: Financing Activities: End. Bal. Accounts Receivable Prepaid Insurance Beg. Bal Beg. Bal End. Bal End. Bal Inventory Buildings and Equipment Beg. Bal Beg. Bal End. Bal End. Bal Accumulated Depreciation Accounts Payable Beg. Bal Beg. Bal End. Bal End. Bal Accrued Expenses Payable Notes Payable Beg. Bal Beg. Bal End. Bal End. Bal Bonds Payable Beg. Bal Beg. Bal End. Bal End. Bal Cost of Goods Sold Depreciation Expense Beg. Bal Beg. Bal End. Bal End. Bal Operating Expenses Net Income (Income Summary) Beg. Bal Beg Bal End. Bal End. Bal Retained Earnings Beg. Bal
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