Required information Problem 3-26A (Static) Comprehensive cycle problem: Perpetual system LO 3-2, 3-3, 3-4, 3-5, 3-6, 3-7 [The following information applies to the questions displayed below.] At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Common stock Retained earnings $16,900 25,000 30,000 11,900 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $15,200 on account from Ross Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $200 were paid in cash. 2. Returned $800 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 $18,000 for $32,000 on account, under terms 2/10, n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $800 and was sold to the customer for $1,500 cash. The customer was paid $1,500 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. Took a physical count indicating that $21,100 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). Event 1a. (Purchase inventory). 1b. (Shipping cost). 4a. (Recording revenue). 4b. (Recording cost of goods sold). $$8 2. 3. 7. 5b (Reversing revenue). (Reversing cost of goods sold). Classification c-1. Prepare a multistep income statement. c-2. Prepare a statement of changes in stockholders' equity. c-3. Prepare a balance sheet. c-4. Prepare a statement of cash flows. Complete this question by entering your answers in the tabs below. Req C1 Req C2 Req C3 Req C4 Prepare a multistep income statement. REDD COMPANY Income Statement For the Year Ended December 31, Year 2 Operating expenses Req C1 Req C2 Req C3 Req C4 Prepare a statement of changes in stockholders' equity. REDD COMPANY Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 Beginning common stock Ending common stock Beginning retained earnings Ending retained earnings Total stockholders' equity Req C1 Req C2 Req C3 Req C4 Prepare a balance sheet. REDD COMPANY Balance Sheet As of December 31, Year 2 Assets Total Assets Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity Req C1 Req C2 Req C3 Req C4 Prepare a statement of cash flows. (Cash outflows should be indicated with a min REDD COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flows from operating activities Net cash flow from operating activities Cash flows from investing activities: Cash flows from financing activities: Net change in cash Ending cash balance