i newconnect mheducation.com Your Cheg9 Sign In or S -GoogleS Connect Ac 4 Revie

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i newconnect mheducation.com Your Cheg9 Sign In or S -GoogleS Connect Ac 4 Review A. ew Assignment Help Save&Exit Check Required information 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: $7,700 ,700 Inventory Conmon stoek Retained earnings 2,200 During Year 2, the company experienced the following events: 1. Purchased inventory that cost S5.200 on account from Ross Company under terms 2/O, n30. The merchandise was delivered FOB shipping point. Freight costs of $470 were paid in cash. 2. Returned $400 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 $5,700 for $8,700 on account, under terms 2/10, n/45 5. Received merchandise returned from a customer. The merchandise originally cost $470 and was sold to the customer for $770 cash. The customer was paid $770 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $570 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $1,400 of inventory was on hand at the end of the accounting period. Required Prev 1 2 3 f 4 Next> 3 4 5

Explanation / Answer

1.

2. REDD COMPANY

Workings:

3. Merchandise Inventory= $(5200-400)*0.02=$96

cash=$(5200-400-96)=$4704

7. Discount expense= $8700*0.02=$174

Cash= $(8700-174)=$8526

Event Classification 1.a. Purchasing inventory AS 1.b. Shipping Cost AE 4.a. Recording Revenue AS 4.b recording cost of goods sold AU 5.a Reversing revenue AU 5.b Reversing cost of goods sold AS

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