displayed below.J

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

Cash

$23,800

Inventory

3.100

Land

Common stock

20.0 000

Retained earnings

11,9 900

During Year 2, the company experienced the following events:

1. Purchased inventory that ct $12,300 on account from Ross Company under terms 2/10, n/30. The merchandise was

delivered FOB shipping point. Freight costs of $910 were paid in cash.

2. Returned $500 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 $9,500 for $17,500 on account, under terms 2/10, n45.

5. Received merchandise returned from a customer. The merchandise originally cost $1,750 and was sold to the customer

for $2,200 cash. The customer was paid $2,200 cash for the returned merchandise.

6. Delivered goods FOB destination in Event 4. Freight costs of $800 were paid in cash

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

8. Sold the land for $5,700.

9. Recognized accrued interest income of $800.

10. Tooka physical count indicating that $4,200 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.)

REDD COMPANY Effect of Events on the Financial Statements for Year 2 Balance Sheet Income Statement Event No. Event Type Statement of Cash Flows Assets = Liabilities + Revenue - Expenses - Stk. Equity NA Net Income NA 1a. AS + + NA NA NA NA 1b. AE +/- NA NA NA NA NA OA 2. 3a. Disc. 3b. Pay 4a. Sale 4b. Cost 5a. Ret Rev 5b. Ret Cost 6. Frt. 7a. Disc 7b. Coll. 8. Land 9. Int. 10. Adj