At the beginning of 2018, the Redd Company had the following balances in its accounts:

Cash	$	8,300
Inventory		2,300
Common stock		7,800
Retained earnings		2,800

During 2018, the company experienced the following events:

1. Purchased inventory that cost $5,800 on account from Redd Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $530 were paid in cash.

2. Returned $300 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 Redd Company within the cash discount period.

4. Sold inventory that had cost $6,300 for $9,300 on account, under terms 2/10, n/45.

5. Received merchandise returned from a customer. The merchandise originally cost $530 and was sold to the customer for $830 cash. The customer was paid $830 cash for the returned merchandise.

6. Delivered goods FOB destination in Event 4. Freight costs of $630 were paid in cash.

7. Collected the amount due on the account receivable within the discount period.

8. Took a physical count indicating that $2,000 of inventory was on hand at the end of the accounting period.

c-1. Prepare a multistep income statement.

REDD COMPANY
Income Statement
For the Year Ended December 31, 2018
Net Sales
Cost of Goods Sold
Gross Margin
Operating expenses
Transportation-out
Net Income

c-2. Prepare a statement of changes in stockholders equity.

REDD COMPANY
Statement of Changes in Stockholders Equity
For the Year Ended December 31, 2018
Beginning common stock
Plus: Stock Issued
Ending common stock
Beginning retained earnings
Plus: Net Income
Ending retained earnings
Total stockholders equity

c-3. Prepare a balance sheet.

REDD COMPANY
Balance Sheet
As of December 31, 2018
Assets
Cash
Merch. Inventory
Total assets
Liabilities
Stockholders Equity
Common Stock
Retained Earnings
Total stockholders equity
Total liabilities and stockholders equity

Prepare a statement of cash flows. (Enter cash outflows as negative amounts.)

REDD COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities
Inflow from customers
Outflow for expenses
Outflow for inventory
Net cash flow from operating activities
Cash flows from investing activities
Cash flows from financing activities
Net change in cash
Plus: Beginning cash balance
Ending cash balance