a. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Event 1a. (Purchase inventory). 1b. (Shipping cost). 2. 3. 4a. (Recording revenue). 4b. (Recording cost of goods sold). 5a. (Reversing revenue). 5b. (Reversing cost of goods sold). 6. 7. 8 Classification
a. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Event 1a. (Purchase inventory). 1b. (Shipping cost). 2. 3. 4a. (Recording revenue). 4b. (Recording cost of goods sold). 5a. (Reversing revenue). 5b. (Reversing cost of goods sold). 6. 7. 8 Classification
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![[The following information applies to the questions displayed below.]
At the beginning of Year 2, the Redd Company had the following balances in its accounts:
Cash
Inventory
Common stock
Retained earnings
$7,500
1,500
7,000
2,000
During Year 2, the company experienced the following events:
1. Purchased inventory that cost $5,000 on account from Ross Company under terms 2/10, n/30. The merchandise was
delivered FOB shipping point. Freight costs of $450 were paid in cash.
2. Returned $350 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed
to pay the return freight cost.
3. Paid the amount due on its account payable to Ross Company within the cash discount period.
4. Sold inventory that had cost $5,500 for $8,500 on account, under terms 2/10, n/45.
5. Received merchandise returned from a customer. The merchandise originally cost $450 and was sold to the customer
for $750 cash. The customer was paid $750 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $550 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $1,200 of inventory was on hand at the end of the accounting period.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb0c53c3c-d25b-4f46-ae7f-d9559756d1d4%2F39a53c92-e534-48c3-b2f4-bc83e73c435c%2Foljyxb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:[The following information applies to the questions displayed below.]
At the beginning of Year 2, the Redd Company had the following balances in its accounts:
Cash
Inventory
Common stock
Retained earnings
$7,500
1,500
7,000
2,000
During Year 2, the company experienced the following events:
1. Purchased inventory that cost $5,000 on account from Ross Company under terms 2/10, n/30. The merchandise was
delivered FOB shipping point. Freight costs of $450 were paid in cash.
2. Returned $350 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed
to pay the return freight cost.
3. Paid the amount due on its account payable to Ross Company within the cash discount period.
4. Sold inventory that had cost $5,500 for $8,500 on account, under terms 2/10, n/45.
5. Received merchandise returned from a customer. The merchandise originally cost $450 and was sold to the customer
for $750 cash. The customer was paid $750 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $550 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $1,200 of inventory was on hand at the end of the accounting period.
Transcribed Image Text:a. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE).
Event
1a. (Purchase inventory).
1b. (Shipping cost).
2.
3.
4a. (Recording revenue).
4b. (Recording cost of goods sold).
5a. (Reversing revenue).
5b. (Reversing cost of goods sold).
6.
7.
8
Classification
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