Question
In: Accounting
At the beginning of Year 2, the Redd Company had the following balances in its accounts:...
At the beginning of Year 2, the Redd Company had the following
balances in its accounts:
| Cash | $ | 8,000 | |
| Inventory | 2,000 | ||
| Common stock | 7,500 | ||
| Retained earnings | 2,500 | ||
During Year 2, the company experienced the following events:
- Purchased inventory that cost $5,500 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $500 were paid in cash.
- Returned $350 of the inventory it had purchased 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 $6,000 for $9,000 on account, under terms 2/10, n/45.
- 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.
- Delivered goods FOB destination in Event 4. Freight costs of $600 were paid in cash.
- Collected the amount due on the account receivable within the discount period.
- Took a physical count indicating that $1,700 of inventory was on hand at the end of the accounting period.
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.
put each of these in Schedule.
Solutions
Expert Solution
Ans-REDD COMPANY
Horizontal Statements Model-Year 2
| Balance Sheet | Income Statement | Statement of Cash Flows | ||||||||||||||||
| Event | Assets | = | Liabilities | + | Stockholders' Equity | |||||||||||||
| Cash | + | Accounts Receivable | + | Merchandise Inventory | = | Accounts Payable | + | Common Stock | + | Retained Earnings | Revenue | - | Expenses | = | Net Income | |||
| Bal. | $8,000 | + | + | $2,000 | = | + | $7,500 | + | $2,500 | - | = | NA | ||||||
| 1 a. | + | + | 5,500 | = | 5,500 | + | + | - | = | NA | ||||||||
| 1 b. | -500 | + | + | 500 | = | + | + | - | = | -500 | OA | |||||||
| 2 | + | + | -350 | = | -350 | + | + | - | = | NA | ||||||||
| 3 | -5,047 | + | + | -103 | = | -5,150 | + | + | - | = | -5,047 | OA | ||||||
| 4 a. | + | 9,000 | + | = | + | + | 9,000 | 9,000 | - | = | 9,000 | NA | ||||||
| 4 b. | + | + | -6,000 | = | + | + | -6,000 | - | 6,000 | = | -6,000 | NA | ||||||
| 5 a. | -800 | + | + | = | + | + | -800 | -800 | - | = | -800 | -800 | OA | |||||
| 5 b. | + | + | 500 | = | + | + | 500 | - | -500 | = | 500 | NA | ||||||
| 6 | -600 | + | + | = | + | + | -600 | - | 600 | = | -600 | -600 | OA | |||||
| 7 | 8,820 | + | -9,000 | + | = | + | + | -180 | -180 | - | = | -180 | 8,820 | OA | ||||
| 8 | + | + | -347 | = | + | + | -347 | - | 347 | = | -347 | NA | ||||||
| Balances | $9,873 | + | 0 | + | $1,700 | = | 0 | + | $7,500 | + | $4,073 | $8,020 | - | $6,447 | = | $1,573 | $1,873 | NC |
|
Assets $11,573 |
= |
Liabilities $0 |
+ |
Stockholders' Equity $7,500+$4,073 =$11,573 |
ekkarill92 answered 1 year agoRelated Solutions
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Company under terms 2/10, n/30. The merchandise was delivered FOB
shipping point. Freight costs of $530 were paid in cash.
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inventory was damaged in...
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