$[$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:

During Year $2,$ the company experienced the following events:

Purchased inventory that cost $$5,400$ on account from Ross Company under terms $\frac{2}{10},\frac{n}{30}.$ The

merchandise was delivered FOB shipping point. Transportation costs of $$490$ were paid in cash.

Returned $$450$ of the inventory that it had purchased because the inventory was damaged in transit. The

seller agreed to pay the return transportation cost.

Paid the amount due on its account payable to Ross Company within the cash discount period. Record

the discount as $3$a$.$ and the cash payment on the payable as $3$b$.$

Sold inventory that had cost $$5,900$ for $$8,900$ on account, under terms $\frac{2}{10},\frac{n}{45}.$

Received merchandise returned from a customer. The merchandise originally cost $$490$ and was sold to

the customer for $$790$ cash. The customer was paid $$790$ cash for the returned merchandise.

Delivered goods FOB destination in Event $4.$ Transportation costs of $$590$ were paid in cash.

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

Took a physical count indicating that $$1,600$ of inventory was on hand at the end of the accounting

period.

b$.$ Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and

statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash

Flows column, classify the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$

Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is

needed.