Question
At the beginning of 2016, the Redd Company had the following balances in its accounts: Cash $6,900 Inventory 15,000 Land 7,000 Common stock 15,000 Retained
At the beginning of 2016, the Redd Company had the following balances in its accounts: |
Cash | $6,900 |
Inventory | 15,000 |
Land | 7,000 |
Common stock | 15,000 |
Retained earnings | 13,900 |
During 2016, the company experienced the following events: |
1. | Purchased inventory that cost $5,200 on account from Ross Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $190 were paid in cash. |
2. | 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. |
3. | Paid the amount due on its account payable to Ross Company within the cash discount period. |
4. | Sold inventory that had cost $6,800 for $12,100 on account, under terms 2/10, n/45. |
5. | Received merchandise returned from a customer. The merchandise originally cost $900 and was sold to the customer for $1,680 cash. The customer was paid $1,680 cash for the returned merchandise. |
6. | Delivered goods FOB destination in Event 4. Freight costs of $140 were paid in cash. |
7. | Collected the amount due on the account receivable within the discount period. |
8. | Sold the land for $8,500. |
9. | Recognized accrued interest income of $600. |
10. | Took a physical count indicating that $13,400 of inventory was on hand at the end of the accounting period. |
Post the beginning balances and the events to the T-accounts. Cash Merchandise Inventory Beg. Bal Beg. Bal End. Bal End. Bal Bal Accounts Receivable Interest Receivable Beg. Ba Beg. Bal End. Bal End. Bal
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