Problem 1 Comprehensive Cycle Problem: Perpetual System At the beginning of Year 2, Hampton Company had the following balances in its accounts: Cash $14,500 Inventory 28,000 Common Stock 18,000 Retained Earnings 24,500 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $18,600 on account from Benson Company under terms 2/10, 1/30. The merchandise was delivered FOB shipping point. Freight costs of $300 were paid in cash. 2. Returned $600 of the inventory it had purchased because the inventory was damaged in transit. The seller agreed to return freight cost. 3. Paid the amount due on its account payable to Benson Company within the cash discount period. 4. Sold inventory that had cost $14,000 for $27,000 on account, under terms 1/10, n/30. 5. Received merchandise returned from a customer. The merchandise originally cost $500 and was sold to the customer for $1,200 cash. The customer was paid $1,200 cash for the returned merchandise, 6. Delivered goods FOB destination in Event 4. Freight costs of $170 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating the $32,000 of inventory was on hand at the end of the accounting period. . Required A. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). B. Record each event in a horizontal financial statements model. C. Prepare a multistep income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows