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At the beginning of 2018, the Redd Company had the following balances in its accounts:

  

Cash	$	8,800
Inventory		2,800
Common stock		8,300
Retained earnings		3,300

  

During 2018, the company experienced the following events:

1. Purchased inventory that cost $6,300 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $580 were paid in cash.

2. Returned $400 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 $6,800 for $9,800 on account, under terms 2/10, n/45.

5. Received merchandise returned from a customer. The merchandise originally cost $580 and was sold to the customer for $880 cash. The customer was paid $880 cash for the returned merchandise.

6. Delivered goods FOB destination in Event 4. Freight costs of $680 were paid in cash.

7. Collected the amount due on the account receivable within the discount period.

8. Took a physical count indicating that $2,500 of inventory was on hand at the end of the accounting period.

• Prepare a multistep income statement.

	REDD COMPANY Income Statement For the Year Ended December 31, 2018 Net sales $8,724 Cost of goods sold Gross margin Operating expenses Transportation-out (680) Net income $1,382

Prepare a statement of cash flows. (Enter cash outflows as negative amounts.)

	REDD COMPANY Statement of Cash Flows For the Year Ended December 31, 2018 Cash flows from operating activities Outflow for inventory Outflow for expenses Inflow from customers Net cash flow from operating activities $0 Cash flows from investing activities 0 Cash flows from financing activities 0 Net change in cash 0 Plus: Beginning cash balance 8,800 Ending cash balance $8,800

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put y ci Multistep Income Statement: Sales Revenue $ 9,800 Less: Sales Returna and allowance $ 880 Sales Discount $ 196 $ -1,076 Net Sales Revenue $ 8,724 Less: Cost of Goods Sold $ -6,662 Gross Margin $ 2,062 Less: Freight Expense $ -680 Net Income $ 1,382 $ 8,300 $ $ 8,300 c2 Statement of change in equity: Beginning Stock Add: Stock Issued Ending Common Stock Beginning Retained Earning Add: Net Income Ending Retained Earning Ending Stockholder's Equity $ 3,300 $ 1,382 $ 4,682 $ 12,982 $ 10,482 $ $ 2,500 $ 12,982 c3 Balance Sheet: Assets: Cash Accounts Receivable Inventory Total Assets Liabilities: Accounts Payable Total Liabilities Stockholder's Equity: Common Stock Retained earning Total Stockholder's Equity Total Liabilities and Equity $ $ - $ 8,300 $ 4,682 $ 12,982 $ 12,982 c4 Statement of Cash Flow Cash flows from operating activities: Received from Accounts Receivable Payment of Inventory Payment of Freight outward Payment of Freight inward Payment of Returned goods Net cash flow from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Add: Beginning Balance Ending cash balance $ 9,604 $ -5,782 $ -580 $ -680 $ -880 $ 1,682 $ $ $ 1,682 $ 8,800 $ 10,482