Question

Required information [The following information applies to the questions displayed below. At the beginning of 2018, the Redd Company had the following balances in its accounts Cash Inventory Common stock Retained earnings $ 8,100 2,100 7,600 2,600 During 2018, the company experienced the following events 1. Purchased inventory that cost $5,600 on account from Redd Company under terms 2/10, n/30 The merchandise was delivered FOB shipping point. Freight costs of $510 were paid in cash 2. Returned $300 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 $6,100 for $9,100 on account, under terms 2/10, n/45 5. Received merchandise returned from a customer. The merchandise originally cost $510 and was sold to the customer for $810 cash. The customer was paid $810 cash for the returned merchandise 6. Delivered goods FOB destination in Event 4. Freight costs of $610 were paid in cash. 7. Collected the amount due on the account receivable within the discount period 8. Took a physical count indicating that $1,800 of inventory was on hand at the end of the accounting period

Answer 1

S.No Account Title Debit Credit la. Merchandise Inventorv 5,600 Accounts Pavable 5.600 lb. Merchandise Inventorv 510 2 Accounts Pavable 300 Merchandise Inventory 300 3a Accounts Pavable [($5.600-$510) 0.02 102 Merchandise Inventory 102 3b. Accounts Pavyable $5,600 $510 $102 4,988 Cash 4.988 a, Accounts Rcccivablc 9.100 Sales Revenue 9,100 4b. Cost of Goods Sold 6.100 Merchandise Inventorv 6,100 5a. Sales Revenue 810 as 810 5b. Merchandise Inventory Cost of Goods Sold 510 6 Tra ortation-out 610 610 7a 182 | Sales Revcnuc ($9.100 × .02) Accounts Receivable 182 7b. Caslh 8,918 Accounts Rcccivable ($9,100- $182) 8.918 418 8 Cost of goods Sold (Invcntory Loss Merchandise Inventorv 418 Created by Universal Document Converter