2 Check my work At the beginning of Year 2, the Redd Company had the following b

Question

2 Check my work At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Common stock Retained earnings $7,600 1,600 7,100 2,100 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5,100 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $460 were paid in cash. 2. Returned $300 of the inventory 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 Ross Company within the cash discount period 4. Sold inventory that had cost $5,600 for $8,600 on account, under terms 2/10, n/45 5. Received merchandise returned from a customer. The merchandise originally cost $460 and was sold to the customer for $760 cash. The customer was paid $760 cash for the returned merchandise 6. Delivered goods FOB destination in Event 4. Freight costs of $560 were paid in cash. 7. Collected the amount due on the account receivable within the discount period 8. Took a physical count indicating that $1,300 of inventory was on hand at the end of the accounting period Prev 1 2 3of 4Next > & A t* 9/25/20 11:08 PM o search

Explanation / Answer

Event Classification 1a Purchase of Inventory AS 1b Shipping cost / Freight cost AE 2 Damage of Inventory AU 3a Discount AU 3b Payable AU 4a Recording Revenue AS 4b Recording cost of goods sold AS 5a Reversing Revenue AU 5b Reversing cost of goods sold AS 6 Freight cost AU 7 Collection AE 8 Adjustment AU

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