Required information Problem 4-26A Comprehensive cycle problem: Perpetual system LO 4-2, 4-3, 4-4,4-5, 4-6, 4-7 (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 Land Conmon stock Retained earnings $23,800 5,000 3,100 20,000 11,900 During Year 2. the company experienced the following events: 1. Purchased inventory that cost $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. Pald 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, 1/45. 5. Received merchandise returned from a customer. The merchandise originally cost $1750 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. Took a 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.) View transaction let Journal entry worksheet 1 3 2 5 6 7 8 15 > Record entry inventory purchased on account from Ross company terms 2/10, n/30. Note: Enter debits before credits General Journal Event 1a Debit Credit c. Post the beginning balances and the events to the T-accounts. Note that these ledger accounts will also be closing entry that is created in Part e. Cash Merchandise Inventory Beg. Bal Beg. Bal End. Bal End. Bal Bal Accounts Receivable Interest Recolvable Beg. Bal Beg. Bal End. Bal End. Bal Land Accounts Payable Ren Ral Ran Ral Land Accounts Payable Beg. Bal Beg. Bal End. Bal End. Bal Common Stock Retained Earnings Beg. Bal Beg. Bal End. Bal End. Bal Sales Revenue Cost of Goods Sold + Beg. Bal Beg. Bal Bal Bal Required information Transportation-out Interest Revenue Beg. Bal Beg. Bal Bal Bal Gain on Sale of Land Beg. Bal Bal d. Prepare a multistep income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows for year 2. (Statement of Cash Flows only, items to be deducted must be indicated with a minus amount.) REDD COMPANY Income Statement For the Year Ended December 31, Year 2 0 Operating expenses 0 Nonoperating items $ 0 REDD COMPANY Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 $ 0 0 Total stockholders' equity $ 0 REDD COMPANY Balance Sheet As of December 31, Year 2 Assets Total assets $ 0 Liabilities Stockholders' Equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 REDD COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities 0 Ending cash balance $ 0