Question
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided
Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from the accounting records of Red, Inc., are provided below.
RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) | |||||||
2021 | 2020 | ||||||
Assets | |||||||
Cash | $ | 23.0 | $ | 156.0 | |||
Accounts receivable | 160.0 | 116.0 | |||||
Prepaid insurance | 10.5 | 5.5 | |||||
Inventory | 286.0 | 168.0 | |||||
Buildings and equipment | 358.0 | 300.0 | |||||
Less: Accumulated depreciation | (85.0 | ) | (210.0 | ) | |||
$ | 752.5 | $ | 535.5 | ||||
Liabilities | |||||||
Accounts payable | $ | 91.0 | $ | 109.0 | |||
Accrued liabilities | 5.5 | 9.5 | |||||
Notes payable | 100.0 | 0.0 | |||||
Bonds payable | 125.0 | 0.0 | |||||
Shareholders Equity | |||||||
Common stock | 400.0 | 400.0 | |||||
Retained earnings | 31.0 | 17.0 | |||||
$ | 752.5 | $ | 535.5 | ||||
RED, INC. Statement of Income For Year Ended December 31, 2021 | ||||||
($ in millions) | ||||||
Revenues | ||||||
Sales revenue | $ | 2,100.0 | ||||
Expenses | ||||||
Cost of goods sold | $ | 1,512.0 | ||||
Depreciation expense | 46.0 | |||||
Operating expenses | 428.0 | 1,986.0 | ||||
Net income | $ | 114.0 | ||||
Additional information from the accounting records:
During 2021, $238.0 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.
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).)
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