Required information [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 $8,000 2,000 7.500 2,500 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5,500 on account from Ross Company under terms 2/10, 1/30. The merchandise was delivered FOB shipping point Freight costs of $500 were paid in cash. 2. Returned $350 of the inventory 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 $6,000 for $9,000 on account, under terms 2/10, 1/45. 5. Received merchandise returned from a customer. The merchandise originally cost $500 and was sold to the customer for $800 cash. The customer was paid $800 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $600 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $1,700 of inventory was on hand at the end of the accounting period. 5 Statement of Cash Flows Event Book Assets Accounts Receivable Cash ferences Bal 8,000 1a 1b REDD COMPANY Horizontal Statements Model - Year 2 Balance Sheet Income Statement - Liabilities + Stockholders' Equity Net Merchandise Accounts Common Retained Revenue Expenses Income Inventory Payable Stock Earnings 2,000 - 7,500 2.500 + + 500 + (350) + (350) 1,030 - 1.030 + 9.000 9.000 9,000 (6.000) + (6.000) 6.000- (6,000) (800) (800) (800) 500 + 500 (500) 1000) 600 (000) (500) OA (500) 2 3. 0 9.000 4b + (800) + 5a 55 (800) OA OA (000)| OA OA 1600) 6. 7 B (9,000) (1,030) - (3.350) - $ 1,0301 1.030 5,6305 9.230 $6.100 $ 05 680 $ 7,500 5 $ 6,100 $ 1.600 $ (1900) NC