Question

of 2 Required information [The following information applies to the questions displayed below) At the beginning of Year 2. the Redd Company had the following balances in its accounts: Cash Inventory Common stock Retained earnings 58,400 2,400 7,900 2,900 nces During Year 2. the company experienced the Sllowing events: 1. Purchased inventory that cost $5,900 on account from Ross Company under terms 2/10,n/30. The merchandise was delivered FOB shipping point. Transportation costs of $540 were paid in cash. 2. Returned $400 of the inventory it had purchased because the inventory was damaged in transit. The seller 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 $6.400 for $9.400 on account, under terms 2/10,n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $540 and was sold to the customer for $840 cash. The customer was paid $840 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Transportation costs of $640 were paid in cash, 7. Collected the amount due on the account receivable within the discount period, 8. Took a physical count indicating that $2,100 of inventory was on hand at the end of the accounting period. c-1. Prepare a multistep income statement. 6-2. Prepare a statement of changes in stockholders' equity c-3. Prepare a balance sheet. C-4. Prepare a statement of cash flows

Answer 1

Income Statement:

Income Statement:
Net Sales	8372
Less: Cost of Goods Sold	6230
Gross Margin	2142
Less: Operating Expense:
Transportation Out	640
Net income	1502

stztement of changes in stockholder equity

Beginning common stock	7900
Plus: stock issued	0
Ending common stock		7900
Beginning retained earnings	2900
Plus: Net income	1502
Ending retained earnings		4402
Total stockholder's equity		12302

balance sheet

Assets
Cash	10202
Merchandise inventory	2100
Total assets		12302
Liabilities:
stockholder's equity
common stock	7900
reatined earnings	4402
Total stockholder's equity		12302
Total Liabilities and stockholder's equity		12302

Cash Flow Statement:
Cash inflow from customer	8372
Cash outflow for inventory	-5930
Cash outflow for Expense	-640
Net Cash flow from operating Activities	1802
Net Cash flow from investing Activities	0
Net Cash flow from Financing Activities	0
Net Change in Cash	1802
Add: beginning Cash Balance	8400
Ending Cash Balance	10202