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home / study / business / accounting / accounting questions and answers / problem 3-26 comprehensive cycle problem: perpetual system lo 3-2, 3-3, 3-4, 3-5 at the beginning ... Your question needs more information to be answered. A Chegg Expert needs more info to provide you with the best answer. See comments below. Question: Problem 3-26 Comprehensive cycle problem: Perpetual system LO 3-2, 3-3, 3-4, 3-5 At the beginning... Edit question Problem 3-26 Comprehensive cycle problem: Perpetual system LO 3-2, 3-3, 3-4, 3-5 At the beginning of 2013, the Bradley Company had the following balances in its accounts: Cash $ 8,200 Inventory 2,200 Common stock 7,700 Retained earnings 2,700 During 2014, the company experienced the following events: 1. Purchased inventory that cost $5,700 on account from Bivins Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $520 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 Bivins Company within the cash discount period. 4. Sold inventory that had cost $6,200 for $9,200 on account, under terms 2/10, n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $520 and was sold to the customer for $820 cash. The customer was paid $820 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $620 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $1,900 of inventory was on hand at the end of the accounting period. References Section BreakProblem 3-26 Comprehensive cycle problem: Perpetual system LO 3-2, 3-3, 3-4, 3-5 Problem 3-26 Part b Required b. Record each event in a statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, NC for net change in cash and NA to indicate the element is not affected by the event. The first event is recorded as an example. (Enter any decreases to account balances and cash outflows with a minus sign.) Problem 3-26 Part c Required c-1. Prepare a multistep income statement. c-2. Prepare a statement of changes in stockholders’ equity. c-3. Prepare a balance sheet. c-4. Prepare a statement of cash flows. (Enter cash outflows as negative amounts.)

Answer 1

Answer

REDD COMPANY
Income Statement
For the year ended Dec 31, 2018
	$
Net Sales revenue (9200-820)	8380
Cost of goods sold (6200-520-30)	5650
Gross margin	2730
Operating expenses:
Freight in (520+620)	1140
Discount allowed	184
Other income:
Discount received	107
Net income (2730-1140-184+107)	1513
REDD COMPANY
Statement of changes in stockholders' equity
For the year ended Dec 31, 2018
	$	$
Beginning common stock	7700
Additions / Deletions	0
Ending common stock		7700
Beginning Retained earnings	2700
Net income	1513
Ending Retained earnings		4213
Total stockholders' equity		11913
REDD COMPANY
Balance Sheet
As of Dec 31, 2018
	$	$
Assets
Cash	10013
Accounts receivable	0
Merchandise Inventory	1900
Total assets		11913
Liabilities
Accounts payable		0
Stockholders' equity
Common stock	7700
Retained earnings	4213
Total Stockholders' equity		11913
Total Liabilities & Stockholders' equity		11913
REDD COMPANY
Statement of Cash flows
For the year ended Dec 31, 2018
	$	$
Cash flow from operating activites
Net Cash from accounts receivable (9016-820)	8196
Cash paid to accounts payable	-5243
Freight charges paid	-1140
Net Cash flow from operating activites		1813
Cash flow from Investing activites
Cash flow from Financing activites
Net change in cash		1813
Beginning cash balance		8200
Ending cash balance		10013