Required information

[The following information applies to the questions displayed below.] At the beginning of 2018, the Redd Company had the following balances in its accounts:

Cash	$	8,800
Inventory		2,800
Common stock		8,300
Retained earnings		3,300

During 2018, the company experienced the following events:

1. Purchased inventory that cost $6,300 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $580 were paid in cash.

2. Returned $400 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 Redd Company within the cash discount period.

4. Sold inventory that had cost $6,800 for $9,800 on account, under terms 2/10, n/45.

5. Received merchandise returned from a customer. The merchandise originally cost $580 and was sold to the customer for $880 cash. The customer was paid $880 cash for the returned merchandise.

6. Delivered goods FOB destination in Event 4. Freight costs of $680 were paid in cash.

7. Collected the amount due on the account receivable within the discount period.

8. Took a physical count indicating that $2,500 of inventory was on hand at the end of the accounting period.

• Prepare a multistep income statement.

REDD COMPANY
Income Statement
For the Year Ended December 31, 2018
Net sales	$8,724
Cost of goods sold
Gross margin
Operating expenses
Transportation-out	(680)
Net income	$1,382

Prepare a statement of cash flows. (Enter cash outflows as negative amounts.)

REDD COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities
Outflow for inventory
Outflow for expenses
Inflow from customers
Net cash flow from operating activities		$0
Cash flows from investing activities		0
Cash flows from financing activities		0
Net change in cash		0
Plus: Beginning cash balance		8,800
Ending cash balance		$8,800