At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash $ 8,400 Inventory 2,400 Common stock 7,900 Retained earnings 2,900 During Year 2, the company experienced the following events: Purchased inventory that cost $5,900 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $540 were paid in cash. Returned $400 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost. Paid the amount due on its account payable to Ross Company within the cash discount period. Sold inventory that had cost $6,400 for $9,400 on account, under terms 2/10, n/45. Received merchandise returned from a customer. The merchandise originally cost $540 and was sold to the customer for $840 cash. The customer was paid $840 cash for the returned merchandise. Delivered goods FOB destination in Event 4. Freight costs of $640 were paid in cash. Collected the amount due on the account receivable within the discount period. Took a physical count indicating that $2,100 of inventory was on hand at the end of the accounting period. c-1. Prepare a multistep income statement. c-2. Prepare a statement of changes in stockholders’ equity. c-3. Prepare a balance sheet. c-4. Prepare a statement of cash flows.
At the beginning of Year 2, the Redd Company had the following balances in its accounts:
| Cash | $ | 8,400 | |
| Inventory | 2,400 | ||
| Common stock | 7,900 | ||
| 2,900 | |||
During Year 2, the company experienced the following events:
-
Purchased inventory that cost $5,900 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $540 were paid in cash.
-
Returned $400 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
-
Paid the amount due on its account payable to Ross Company within the cash discount period.
-
Sold inventory that had cost $6,400 for $9,400 on account, under terms 2/10, n/45.
-
Received merchandise returned from a customer. The merchandise originally cost $540 and was sold to the customer for $840 cash. The customer was paid $840 cash for the returned merchandise.
-
Delivered goods FOB destination in Event 4. Freight costs of $640 were paid in cash.
-
Collected the amount due on the
account receivable within the discount period. -
Took a physical count indicating that $2,100 of inventory was on hand at the end of the accounting period.
-
c-1. Prepare a multistep income statement.
-
c-2. Prepare a statement of changes in
stockholders’ equity. -
c-3. Prepare a
balance sheet . -
c-4. Prepare a statement of
cash flows.
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