70.2K

Verified Solution

Link Copied!

At the beginning of Year 2, the Redd Company had the following balances in its accounts. During Year 2 , the company experienced the following events: 1. Purchased inventory that cost $6,200 on account from Ross Company under terms 210,n/30. The merchandise was delivered FOB shipping point. Transportation costs of $570 were paid in cash. 2. Returned $300 of the inventory it had purchased because the inventory was damaged in transit. The seler agreed to pay the return transportation cost. 3. Paid the amount due on its account payable to Ross Company within the cash discount period. 4. Sold inventory that had cost $6,700 for $9,700 on account, under terms 210 , n/45 5. Received merchandise returned from a customet. The merchandise originally cost $570 and was sold to the customer for $870 cash. The customer was paid $870 cash for the returned merchandise 6. Delivered goods FOB destination in Event 4 . Transponation costs of $670 were paid in cash. 7. Collected the amount due on the account recelvable within the discount period. 8. Took a physical count indicating that $2,400 of inventory was on hand at the end of the accounting period. 2. Record each event in a horizontal financial statements model. Note: In the Cosh Flow column, use OA to deslgnote operating actlvity, IA for Investment octlvity, FA for financing activity, and NC for net change in cesh. Enter any decreases to occount belences ond cash outflows with a minus slgn. Not all celis in the Statement of Cosh Flows" column moy require an input - leave celis blank if there is no correspondlng input needed

Answer & Explanation Solved by verified expert

See Answer