[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, n/30. The merchandise was delivered FOB shipping point. Transportation 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 transportation 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, n/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. Transportation 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. b. Record each event in a horizontal financial statements model. (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. 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.) REDD COMPANY Horizontal Statements Model - Year 2 Balance Sheet Income Statement Liabilities + Stockholders' Equity Accounts Payable Common + Stock Retained Revenue Earnings Expenses Net Income Statement of Cash Flows 2,000 7,500+ 2,500 . Event Assets Accounts Merchandise Cash Receivable Inventory Bal 8,000 + 10. 1b. 2 3 4a 4b. 5a 5b 6 7 8 Bal