Question
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:
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 | $ | 16,800 |
Inventory | 4,000 | |
Land | 2,000 | |
Common stock | 12,000 | |
Retained earnings | 10,800 | |
During Year 2, the company experienced the following events:
- Purchased inventory that cost $11,200 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $800 were paid in cash.
- Returned $600 of the inventory it had purchased from Ross Company because the inventory was damaged in transit. The seller agreed to pay the return freight cost.
- Paid the amount due on its account payable to Ross Company within the cash discount period.
- Sold inventory that had cost $8,000 for $13,500 on account, under terms 2/10, n/45.
- Received merchandise returned from a customer. The merchandise originally cost $1,200 and was sold to the customer for $2,100 cash. The customer was paid $2,100 cash for the returned merchandise.
- Delivered goods FOB destination in Event 4. Freight costs of $800 were paid in cash.
- Collected the amount due on the account receivable within the discount period.
- Sold the land for $3,500.
- Recognized accrued interest income of $500.
- Took a physical count indicating that $6,500 of inventory was on hand at the end of the accounting period. (Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down.)
Use a single general journal to close all revenue, gain, and expense accounts to the retained earnings account. Post the journal entry to the ledger accounts created in Part c and prepare a post-closing trial balance. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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