AC201 Unit 4 Homework
At the beginning of Year 2, the Redd Company had the following balances in its accounts. Cash Inventory Land Common stock Retained earnings During Year 2, the company experienced the following events: $14,300 4,500 2,100 10,000 10,900 1. Purchased inventory that cost $11,300 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $810 were paid in cash. 2. Returned $500 of the inventory 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 $7,000 for $13,000 on account, under terms 2/10, n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $1,250 and was sold to the customer for $2,200 cash. The customer was paid $2,200 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $700 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Sold the land for $3,700. 9. Recognized accrued interest income of $300. 10. Took a physical count indicating that $6,600 of inventory was on hand at the end of the accounting period. Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down. Required:
\begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ REDD COMPANY } \\ \hline Statement of Changes in Stockholders' Equity \\ \hline \multicolumn{2}{|c|}{ For the Year Ended December 31, Year 2} \\ \hline & \\ \hline & \\ \hline & \\ \hline \end{tabular} Req D1 Req D3 Journal entry worksheet Record entry to close all revenue, gain, and expense accounts to the retained earnings account. Note: Enter debits before credits. Journal entry worksheet Record entry for sale of inventory on account. Note: Enter debits before credits. Journal entry worksheet Record entry for discount on inventory purchased. Note: Enter debits before credits. Pranare a balance sheet for Year 2. At the beginning of Year 2, the Redd Company had the following balances in its accounts. During Year 2 , the company experienced the following events: 1. Purchased inventory thot cost $11,300 on account from Ross Company under terms 2/10,n/30. The merchandise was delivered FOB shipping point. Freight costs of $810 were paid in cash 2. Returned $500 of the inventory it had purchased because the inventory was damaged in transit. The seller agreed to pay the retum 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 $7,000 for $13,000 on account, under terms 2/10,n/45. 5. Received merchandise returned from a customer. The merchancise onginally cost $1,250 and wos sold to the customer for $2,200 cash. The customer was paid $2,200 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $700 were paid in cash. 7. Collected the amount due on the occount recenvible within the discount period. 8. Sold the land for $3,700, 9. Recognized accrued interest income of $300. 10. Took a physical count indicating that $6,600 of inventory was on hand at the end of the accounting period. Hent: Determine the current bolance in the inventory account before calculating the amount of the inventory write down Prepare a statement of cash flows for Year 2 . (Cash outflows should be indicated with a minus 5 \begin{tabular}{l} REDD COMPANY \\ Statement of Cash Flows \\ For the Year Ended December 31, Year 2 \\ \hline Cash flow from operating activities \\ \hline \\ \hline Net cash flow from operating activities \end{tabular} Prepare a multistep income statement for Year 2. Journal entry worksheet Record the entry for inventory purchased on account from Ross company under terms 1/10,n/30. Noves Enter aebits before credits. a. Identify each of these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Also explain how each event would affect the financial statements by placing a + for increase, - for decrease, and +1 -for increase and decrease under each of the components in the following statements model. Assume that the perpetual inventory method is used. When an event has more than one part, use letters to distinguish the effects of each part. The first event is recorded as an example. b. Record the events in general journal format. Assume that the perpetual inventory method and gross method is used. c. Post the beginning balances and the everits to the T-accounts. Note that these ledger accounts will also be used when posting the closing entry that is created in Part e. d. Prepare a multistep income statement, a statement of changes in stockholders' equity, o balance sheet, and a statement of cash flows for Year 2 e. Use a single general journal entry to close all revenue, gain, and expense account to the retained earnings account. Post the journal entry to the ledger accounts and prepare a post-closing trial balance. Journal entry worksheet Note: Enter debits before credits. \begin{tabular}{|l|l|l|l|} \hline \multicolumn{3}{|c|}{ Gain on Sale of Land } \\ \hline Beg. Bal. & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline Beg. Bal. Interest Revenue & \\ \hline & & & \\ \hline \end{tabular} End. Bal. Req D1 > Mineinn antrini thakile makad in Dant a Journal entry worksneed Record the entry for cash paid for accounts payable. Note: Enter debits before credics. Journal entry worksheet Record the entry for return of inventory that was damaged in transit. Note: Enter debits before credits
