Question

Comparative balance sheets for 2018 and 2017, a statement of income for 2018, and additional information from the accounting records of Red, Inc., are provided below.

RED, INC. Comparative Balance Sheets December 31, 2018 and 2017 ($ in millions)
	2018				2017
Assets
Cash	$	28.0			$	124.0
Accounts receivable		158.0				120.0
Prepaid insurance		10.0				5.0
Inventory		266.0				162.0
Buildings and equipment		379.0				335.0
Less: Accumulated depreciation		(98.0	)			(235.0	)
	$	743.0			$	511.0
Liabilities
Accounts payable	$	84.0			$	95.0
Accrued expenses payable		3.0				5.0
Notes payable		50.0				0.0
Bonds payable		155.0				0.0
Shareholders’ Equity
Common stock		400.0				400.0
Retained earnings		51.0				11.0
	$	743.0			$	511.0

RED, INC. Statement of Income For Year Ended December 31, 2018
($ in millions)
Revenues
Sales revenue				$	1,820.0
Expenses
Cost of goods sold	$	1,274.0
Depreciation expense		34.0
Operating expenses		422.0			1,730.0
Net income				$	90.0

1. During 2018, $224.0 million of equipment was purchased to replace $180.0 million of equipment (95.0% depreciated) sold at book value.
2. 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).)

Answer 1

THANKS