Cash Inventory Common stock Retained earnings $8,200 2,200 7,700 2,700 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5,700 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $520 were paid in cash. 2. Returned $350 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 $6,200 for $9,200 on account, under terms 2/10, n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $520 and was sold to the customer for $820 cash. The customer was paid $820 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $620 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $1,900 of inventory was on hand at the end of the accounting period. Balance Sheet REDD COMPANY Horizontal Statements Model - Year 21 Income Statement. Event Assets Liabilities + Accounts Merchandise Cash Receivable Inventory Accounts Payable Stockholders' Equity Common Stock Expenses Retained Revenue Earnings Net Income Statement of Cash Flows Bal. 8,200+ 2,200= 7,700+ 2,700 1a. + 1b. (520) + 3. 4a. 4b. 5a. 5b. 6. + + 7. + 8. + Bal. $ 7,680 $ 0+ $ 2,200 = $ 0+ $ 7,700+ $ 2,700 $ 0 $ 0 $ 0 $ 0 23