Required information [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) Assets Cash Accounts receivable Prepaid insurance Inventory Buildings and equipment Less: Accumulated depreciation Liabilities Accounts payable Accrued liabilities Notes payable Bonds payable Shareholders' Equity Common stock Retained earnings 2021 2020 $ 22.9 115.0 6.6 $ 214.4 65.0 4.6 281.0 153.0 443.0 375.0 (131.0) (263.0) $ 737.5 $ 549.0 $ 96.0 9.5 $ 108.5 17.5 100.0 0.0 100.0 0.0 400.0 32.0 400.0 23.0 $ 737.5 $ 549.0 RED, INC. Statement of Income For Year Ended December 31, 2021 Revenues ($ in millions) Sales revenue $2,600.0 Expenses Cost of goods sold Depreciation expense Operating expenses $1,950.0 58.0 483.0 Net income 2,491.0 $ 109.0 Additional information from the accounting records: a. During 2021, $268.0 million of equipment was purchased to replace $200.0 million of equipment (95.0% depreciated) sold at book value. b. 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. Beg. Bal. Operating Activities: For expenses From customers Issuance of bonds Investing Activities: Issuance of bonds From customers Issuance of notes Financing Activities: Issuance of notes Cash (Statement of Cash Flows) Issuance of bonds Issuance of bonds End. Bal. Accounts Receivable Prepaid Insurance Beg. Bal Beg. Bal End. Bal End. Bal Inventory Beg. Bal Buildings and Equipment Beg. Bal End. Bal End. Bal Accumulated Depreciation Accounts Payable Beg. Bal Beg. Bal End. Bal End. Bal Accrued Liabilities Beg. Bal Notes Payable Beg. Bal End. Bal End. Bal Bonds Payable Sales Beg. Bal Beg. Bal End. Bal End. Bal Cost of Goods Sold Beg. Bal Depreciation Expense Beg. Bal End. Bal End. Bal Operating Expenses Beg. Bal Beg. Bal Net Income End. Bal End. Bal Net Income (Income Summary) Retained Earnings Beg. Bal Common Stock Beg. Bal End. Bal End. Bal