Question

Required Information Problem 4-26A Comprehensive cycle problem: Perpetual system LO 4-2, 4-3, 4-4, 4-5, 4-6, 4-7 [The following information applies to the questions displayed below.] m. Part 3 of 5 At the beginning of Year 2, the Redd Company had the following balances in its accounts: 10 points $ 6,900 15, eee Cash Inventory Land Common stock Retained earnings 7, eee 15, eee 13,900 eBook During Year 2. the company experienced the following events: Ask References 1. Purchased inventory that cost $5,200 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 $12,100 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 $1.680 cash. The customer was paid $1,680 cash 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. 10. Took a physical count indicating that $13.400 of inventory was on hand at the end of the accounting period. (Hint: Determine the current balance in the inventory account before calculating the amount of the inventory write down.) Problem 4-26A Part C c. Post the beginning balances and the events to the T-accounts. Note that these ledger accounts will also be used when posting the closing entry that created in Part e.

Answer 1

Requirement c

Beg. Bal. 1 190 $ $ Cash 6,900 11,858 8,500 7 3 5 $ $ $ 8 4,752 1,680 140 6 End. Bal. $ 20,496 Beg. Bal. Accounts Receivable 7 12,100 $ $ $ 12,100 4 End. Bal. $ 2 400 Beg. Bal. 1 Inventory 15,000 5,390 900 3 48 $ $ $ $ 5 4 6,800 End. Bal. $ 14,042 10 $ 542 End. Bal. $ 13,500 Interest Receivable Beg. Bal. 9 $ $ 600 End. Bal. $ 600 Land 7,000 Beg. Bal. $ 8 $ 7,000 End. Bal. $ w N Accounts Payable 400 Beg. Bal. 4,800 1 $ $ $ 5,200 End. Bal. $ Common Stock Beg. Bal. $ 15,000 End. Bal. $ 15,000

Retained Earnings Beg. Bal. $ 13,900 End. Bal. $ 13,900 Cost of Goods sold 6,800 5 4 $ $ 900 End. Bal. $ 5,900 Sales 4 $ 12,100 End. Bal. $ 12,100 Sales returns 1,680 5 $ End. Bal. $ 1,680 Sales Discounts 242 7 $ End. Bal. $ 242 Freight outwards 140 6 $ $ End. Bal. $ 140 Gain on sale of land 8 $ $ 1,500 End. Bal. $ 1,500 Interest income 9 $ 600 End. Bal. $ 600 Loss on Inventory write off $ 542 10 End. Bal. $ 542