Comparative balance sheets for 2021 and 2020, a statement of income for 2021, and additional information from
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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 below.
RED, INC. Comparative Balance Sheets December 31, 2021 and 2020 ($ in millions) | |||||||
2021 | 2020 | ||||||
Assets | |||||||
Cash | $ | 36.5 | $ | 142.5 | |||
Accounts receivable | 164.0 | 123.0 | |||||
Prepaid insurance | 7.5 | 3.5 | |||||
Inventory | 277.0 | 165.0 | |||||
Buildings and equipment | 362.0 | 310.0 | |||||
Less: Accumulated depreciation | (48.0 | ) | (217.0 | ) | |||
$ | 799.0 | $ | 527.0 | ||||
Liabilities | |||||||
Accounts payable | $ | 81.0 | $ | 96.0 | |||
Accrued liabilities | 9.0 | 17.0 | |||||
Notes payable | 40.0 | 0.0 | |||||
Bonds payable | 250.0 | 0.0 | |||||
Shareholders' Equity | |||||||
Common stock | 400.0 | 400.0 | |||||
Retained earnings | 19.0 | 14.0 | |||||
$ | 799.0 | $ | 527.0 | ||||
RED, INC. Statement of Income For Year Ended December 31, 2021 | ||||||
($ in millions) | ||||||
Revenues | ||||||
Sales revenue | $ | 1,700.0 | ||||
Expenses | ||||||
Cost of goods sold | $ | 1,190.0 | ||||
Depreciation expense | 40.0 | |||||
Operating expenses | 425.0 | 1,655.0 | ||||
Net income | $ | 45.0 | ||||
Additional information from the accounting records:
a. During 2021, $272.0 million of equipment was purchased to replace $220.0 million of equipment (95.0% depreciated) sold at book value.
b. In order to maintain the usual policy of paying cash dividends of $40.0 million, it was necessary for Red to borrow $40.0 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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Related Book For
Intermediate Accounting
ISBN: 978-1260481952
10th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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