At the beginning of 2018, the Redd Company had the following balances in its acc
ID: 2574312 • Letter: A
Question
At the beginning of 2018, 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 2018, the company experienced the following events: . Purchased inventory that cost $5,500 on account from Redd Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $500 were paid in cash 2. Returned $350 of the inventory that 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 Redd 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. Freight 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 periocExplanation / Answer
Balance Sheet Event Assets Liabilities Stockholders equity Income statement Statement of cash flows Cash + Accounts receivable + Merchandise inventory = Accounts payable + Common stock + Retained earnings Revenue - Expenses = Net income Bal. 8000 + + 2000 = + 7500 + 2500 - = NA 1a 5500 5500 0 0 1b -500 500 -500 -500 2 -350 -350 0 0 3 -5047 -5150 103 103 -5047 4a 9000 9000 9000 0 4b -6000 6000 -6000 0 5a -800 -800 -800 -800 5b 500 -500 500 0 6 -600 600 -600 -600 7 8820 -9000 180 -180 8820 8 50 -50 50 0 Bal. 9873 0 1700 0 7500 2500 8303 6730 1573 1873
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