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Required information Skip to question [The following information applies to the questions displayed below.] Comparative balance sheets for 2021 and 2020, a statement of income
Required information
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[The following information applies to the questions displayed below.] 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 | $ | 36.0 | $ | 135.0 | |||
Accounts receivable | 162.0 | 122.0 | |||||
Prepaid insurance | 14.0 | 7.0 | |||||
Inventory | 272.0 | 164.0 | |||||
Buildings and equipment | 368.0 | 320.0 | |||||
Less: Accumulated depreciation | (72.0 | ) | (224.0 | ) | |||
$ | 780.0 | $ | 524.0 | ||||
Liabilities | |||||||
Accounts payable | $ | 82.0 | $ | 96.0 | |||
Accrued liabilities | 8.0 | 15.0 | |||||
Notes payable | 50.0 | 0.0 | |||||
Bonds payable | 175.0 | 0.0 | |||||
Shareholders Equity | |||||||
Common stock | 400.0 | 400.0 | |||||
Retained earnings | 65.0 | 13.0 | |||||
$ | 780.0 | $ | 524.0 | ||||
RED, INC. Statement of Income For Year Ended December 31, 2021 | ||||||
($ in millions) | ||||||
Revenues | ||||||
Sales revenue | $ | 1,880.0 | ||||
Expenses | ||||||
Cost of goods sold | $ | 1,316.0 | ||||
Depreciation expense | 38.0 | |||||
Operating expenses | 424.0 | 1,778.0 | ||||
Net income | $ | 102.0 | ||||
Additional information from the accounting records:
- During 2021, $248.0 million of equipment was purchased to replace $200.0 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).)
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