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 $8,400 2,400 7.900 2,900 During Year 2, the company experienced the following events: 1. Purchased inventory that costy$5,900 on account from Ross Company under terms 2/10, 1/30. The merchandise was delivered FOB shipping point. Freight costs of $540 were paid in cash. 2. Returned $400 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 $6.400 for $9,400 on account, under terms 2/10, 1/45. 5. Received merchandise returned from a customer. The merchandise originally cost $540 and was sold to the customer for $840 cash. The customer was paid $840 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $640 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $2,100 of inventory was on hand at the end of the accounting period. b. Record each event in a statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. The first event is recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed.) Event 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 4,400 7.900 2,900 Statement of Cash Flows Assets Cash Accounts Receivable 8,400 + + Bal 1a 1b + WN 4a . 4b. 50 + 5b 6 7 8 Bal