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[The following information applies to the questions displayed below.] At the beginning of Year 2, the Redd Company had the following balances in its
[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 $8,900 2,900 8,400 Retained earnings 3,400 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $6,400 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Transportation costs of $590 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 $6,900 for $9,900 on account, under terms 2/10, n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $590 and was sold to the customer for $890 cash. The customer was paid $890 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Transportation costs of $690 were paid in cash, 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $2,600 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.)
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