60.1K

Verified Solution

Link Copied!

At the beginning of Year 2, the Redd Company had the following balances in its accounts: Cash Inventory Land Common stock Retained earnings $ 6,900 15,000 7,000 15,000 13,900 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5,400 on account from Ross Company under terms 1/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $190 were paid in cash. 2. Returned $400 of the inventory it had purchased from Ross Company 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 $6,800 for $12,000 on account, under terms 2/10,n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $900 and was sold to the customer for $2,000 cash. The customer was given credit for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $140 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Sold the land for $8,500. 9. Recognized accrued interest income of $600, REDD COMPANY Income Statement For the Year Ended December 31, Year 2 Net sales Cost of goods sold Gross margin Operating expenses Sales returns and allowances 0 Sales discounts Operating income Nonoperating items 0 Interest expense Gain on sale of land Net income $ 0 REDD COMPANY Statement of Changes in Stockholders' Equity For the Year Ended December 31, Year 2 $ 0 0 Total stockholders' equity $ 0 REDD COMPANY Balance Sheet As of December 31, Year 2 Assets o Total assets $ Liabilities Stockholders' Equity 0 Total stockholders' equity Total liabilities and stockholders' equity $ 0 REDD COMPANY Statement of Cash Flows For the Year Ended December 31, Year 2 Cash flow from operating activities $ 0 Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities 0 $ Ending cash balance O

Answer & Explanation Solved by verified expert

See Answer