At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $ 6,900 15,000 7,000 15,000 13,900 During Year 2, the company experienced the following events: 1. Purchased Inventory that cost $5,200 on account from Ross Company under terms 110. n/30. The merchandise was dellvered FOB shipping point. Freight costs of $190 were paid in cash. 2. Returned $400 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. 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 $1680 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. (Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down.) Financial Statements Effect of Events on the Financial Statemonts for Yoar 2 Balance Shoot Income Statomont Event No. Event Type Statement of Cash Flows Assets = Liabilities Rovonuo Expenses Nat Income NA 1a. AS Stk. Equity NA NA + NA NA NA NA 1b. AE + NA NA NA NA 2. 3a. Disc 3b. Pay. 4a. Sale 4b. Cost 5a. Ret Rev 5b. Ret Cost 6. Frt. 7a. Disc 7. Coll 8. Land 9. Int. 10. Adi Answer is complete but not entirely correct. REDD COMPANY Balance Sheet As of December 31, Year 2 Assets $ 10,530 13,400 600 x 0 Cash Merchandise inventory Interest receivable Land Total assets Liabilities Stockholders' Equity Common stock Retained earnings $ 24,530 nil $ 15,000 19,497 34,497 Total stockholders' equity Total liabilities and stockholders! equity $ 34,497 REDD COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities $ Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities 0 Ending cash balance $ 0 Journal entry worksheet Record entry to close all revenue, gain, and expense accounts to the retained earnings account. Note: Enter debits before credits. General Journal Dobit Credit Date Dec 31 Record entry Clear entry Vlew general Journal REDD COMPANY Post Closing Trial Balance December 31, Year 2 Account Titles Debit Credit Total $ 0 $ 0