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 that cost $5,200 on account from Ross Company under terms 1/10,n/30. The merchandise was delivered FOB shipping point. Frelght costs of $190 were paid in cash. 2. Retumed $400 of the inventory it had purchased because the inventory wos damaged in transit. The seller agreed to pay the return freight cost. 3. Pald 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. Recelved merchandise retumed 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 retumed 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. Hint Determine the current balance in the inventory account before calculating the amount of the inventory write down. Required: 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 +- for increase and decrease under each of the components in the foliowing 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 events to the T-accounts. Note that these ledger accounts wil 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, a balance sheet, and a statement of cash flows for Year 2. e. Use a single general joumal entry to close all revenue. gain, and expense accounts to the retained earnings account. Post the joumal entry to the ledger accounts and prepare a post-closing tribl balance. Tdentify esch of these events as asset source (AS), asset use (AU), asset exchange (AE), or clalms exchange (CE). Also explain how each 6vent would amect the flnancial statements by plachg a + for increase, - for decrease, and +f - for increase and decrease under each of the comporients in the following statements model. Assume that the pempetual liventory method is used. When an event has more than one part, use letters to distingulsh the effects of each part. The Pirst event is recorded as an example. (in the Statement of Cash Fiows column, use the inltiais OA to designate operating activity, IA for investing activity, and FA for financing actlievy.) 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 that cost $5,200 on account from Ross Company under terms 1/10,n/30. The merchandise was delivered FOB shipping point. Frelght costs of $190 were paid in cash. 2. Retumed $400 of the inventory it had purchased because the inventory wos damaged in transit. The seller agreed to pay the return freight cost. 3. Pald 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. Recelved merchandise retumed 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 retumed 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. Hint Determine the current balance in the inventory account before calculating the amount of the inventory write down. Required: 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 +- for increase and decrease under each of the components in the foliowing 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 events to the T-accounts. Note that these ledger accounts wil 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, a balance sheet, and a statement of cash flows for Year 2. e. Use a single general joumal entry to close all revenue. gain, and expense accounts to the retained earnings account. Post the joumal entry to the ledger accounts and prepare a post-closing tribl balance. Tdentify esch of these events as asset source (AS), asset use (AU), asset exchange (AE), or clalms exchange (CE). Also explain how each 6vent would amect the flnancial statements by plachg a + for increase, - for decrease, and +f - for increase and decrease under each of the comporients in the following statements model. Assume that the pempetual liventory method is used. When an event has more than one part, use letters to distingulsh the effects of each part. The Pirst event is recorded as an example. (in the Statement of Cash Fiows column, use the inltiais OA to designate operating activity, IA for investing activity, and FA for financing actlievy.)