Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 | $ | 28.0 | $ | 124.0 | |||
Accounts receivable | 158.0 | 120.0 | |||||
Prepaid insurance | 10.0 | 5.0 | |||||
Inventory | 266.0 | 162.0 | |||||
Buildings and equipment | 379.0 | 335.0 | |||||
Less: Accumulated depreciation | (98.0 | ) | (235.0 | ) | |||
$ | 743.0 | $ | 511.0 | ||||
Liabilities | |||||||
Accounts payable | $ | 84.0 | $ | 95.0 | |||
Accrued expenses payable | 3.0 | 5.0 | |||||
Notes payable | 50.0 | 0.0 | |||||
Bonds payable | 155.0 | 0.0 | |||||
Shareholders Equity | |||||||
Common stock | 400.0 | 400.0 | |||||
Retained earnings | 51.0 | 11.0 | |||||
$ | 743.0 | $ | 511.0 | ||||
RED, INC. Statement of Income For Year Ended December 31, 2018 | ||||||
($ in millions) | ||||||
Revenues | ||||||
Sales revenue | $ | 1,820.0 | ||||
Expenses | ||||||
Cost of goods sold | $ | 1,274.0 | ||||
Depreciation expense | 34.0 | |||||
Operating expenses | 422.0 | 1,730.0 | ||||
Net income | $ | 90.0 | ||||
- During 2018, $224.0 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 $50.0 million, it was necessary for Red to borrow $50.0 million from its bank.
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).)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started