At the beginning of Year 2, the Redd Company had the following balances in its accounts Cash $ 14,800 Inventory 5,000 Land 2,200 Common stock 11,000 Retained earnings 11,000 During Year 2, the company experienced the following events Purchased inventory that cost $11,400 on account from Ross Company under terms 2 10, n 30 The merchandise was delivered FOB shipping point Freight costs of $820 were paid in cash Returned $550 of the inventory it had purchased from Ross Company 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 $7,500 for $13,500 on account, under terms 2 10, n 45 Received merchandise returned from a customer The merchandise originally cost $1,300 and was sold to the customer for $2,300 cash The customer was paid $2,300 cash for the returned merchandise Delivered goods FOB destination in Event 4 Freight costs of $710 were paid in cash Collected the amount due on the account receivable within the discount period Sold the land for $3,900 Recognized accrued interest income of $350 Took a physical count indicating that $6,700 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, for increase and decrease, or NA for not affected 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 (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NA for not affected )

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At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash $ 14,800 Inventory 5,000 Land 2,200 Common stock

At the beginning of Year 2, the Redd Company had the following balances in its accounts:


Cash	$	14,800
Inventory		5,000
Land		2,200
Common stock		11,000
Retained earnings		11,000

During Year 2, the company experienced the following events:

Purchased inventory that cost $11,400 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $820 were paid in cash.
Returned $550 of the inventory it had purchased from Ross Company 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 $7,500 for $13,500 on account, under terms 2/10, n/45.
Received merchandise returned from a customer. The merchandise originally cost $1,300 and was sold to the customer for $2,300 cash. The customer was paid $2,300 cash for the returned merchandise.
Delivered goods FOB destination in Event 4. Freight costs of $710 were paid in cash.
Collected the amount due on the account receivable within the discount period.
Sold the land for $3,900.
Recognized accrued interest income of $350.
Took a physical count indicating that $6,700 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, +/ for increase and decrease, or NA for not affected 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. (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, and NA for not affected.)