Question 2: 30 marks (Nature of Retained Earnings) Assuming the opening balances of a company's balance sheet of a company are as follows: Cash Paid-in Capital $ 1,000 1,000 The company carried out the following transactions during the year: 1. Purchase inventory for $600 cash; and 2. Sell the entire inventory for $850 cash; and 3. Buy inventory for $300 cash and equipment for $800 cash; and 4. Buy inventory for $500 on account. Required: a. Under Transaction 1 above, prepare (or extend) the above balance sheet. Subject headings like "Current Assets" or "Non-current Assets" are not required. (5 marks) b. For Transaction 2 above, extend the above balance sheet. Also, explain in your own words, what does retained earnings represent? c. For Transaction 3 above, extend the above balance sheet. (8 marks) (7 marks) d. For Transaction 4 above, extend the above balance sheet. Also, explain in your own words, what do retained earnings and account payable represent? Guidelines for students: (10 marks) 1. you are required to show a separate balance sheet in each of the transactions above, i.e., you cannot just give us one final balance sheet for the whole question. 2. Please use point-form to explain your ideas for b. and d. above.