80.2K

Verified Solution

Link Copied!

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).)

Answer & Explanation Solved by verified expert

See Answer