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Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are
Comparative balance sheets for 2024 and 2023, a statement of income for 2024, and additional information from the accounting records of Red, Incorporated, are provided below: RED, INCORPORATED Comparative Balance Sheets December 31, 2024 and 2023 ($ in millions) 2024 2023 Assets Cash $ 32 $ 128 Accounts receivable 149 140 Prepaid insurance 8 4 Inventory 301 183 Buildings and equipment 416 358 Less: Accumulated depreciation (127) (248) $ 779 $ 565 Liabilities Common stock Accounts payable Accrued liabilities Notes payable Bonds payable Shareholders' Equity Retained earnings $ 95 $ 116 7 33 170 12 0 0 408 408 66 29 $ 779 $ 565 Revenues RED, INCORPORATED Statement of Income For Year Ended December 31, 2024 ($ in millions) Sales revenue Expenses Cost of goods sold Depreciation expense Operating expenses Net income $ 2,060 $ 1,457 41 492 1,990 $ 70 Additional information from the accounting records: a. During 2024, $238 million of equipment was purchased to replace $180 million of equipment (90% depreciated) sold at book value. b. In order to maintain the usual policy of paying cash dividends of $33 million, it was necessary for Red to borrow $33 million from its bank.
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