Question

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	$	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.

1. c-1. Prepare a multistep income statement.

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	$	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.

rev: 04_30_2020_QC_CS-210527

1. c-1. Prepare a multistep income statement.

2. 	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 multistep income statement.

3. Need Help getting the cost of good sold and gross margin

Answer 1

Answer:

Income Statement:
Net Sales (9800-880-(9800*0.02))	8724
Less: Cost of Goods Sold (6800+446-580)	6666
Gross Margin	2058
Less: Operating Expense:
Transportation Out	680
Operating Income	1378

Merchandise inventory
Beg bal	2800	2	400
la	6300	3a (6300-580)*0.02	114
lb	580	4b	6800
5b	580
Bal	2946
		8	446
End bal	2500