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 Garning $7,800 1,800 7.300 2.300 During 2018, the company experienced the following events: 1. Purchased Inventory that cost $5,300 on account from Ross Company under terms 2/10,n/30. The merchandise was deilvered FOB shipping point. Freight costs of $480 were paid in cash. 2. Returned $350 of the inventory that it had purchased because the inventory was damaged in transit. The seller agreed to pay the return freight cost 3. Pald the amount due on its account payable to Redd Company within the cash discount period. 4. Sold Inventory that had cost $5,800 for $8,800 on account, under terms 2/10, 1/45 5. Received merchandise returned from a customer. The merchandise originally cost $480 and was sold to the customer for $780 cash. The customer was paid $780 cash for the returned merchandise 6. Delivered goods FOB destination in Event 4. Freight costs of $580 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $1,500 of Inventory was on hand at the end of the accounting period. c-1. Prepare a multistep income statement c-2. Prepare a statement of changes in stockholders' equity .-3. Prepare a balance sheet 0-4. Prepare a statement of cash flows. Complete this question by entering your answers in the tabs below. RCI Reg C2 Reg Ca Reg C4 Prepare a statement of cash flows, Enter cash outflows as negative amounts.)

Answer 1

ANSWER:-

C-1)

REDD COMPANY

Income Statement

For the Year Ended December 31, 2018

Net sales	$7,844
Cost of goods sold	($5,631)
Gross margin	$2,213
Operating expenses
Transportation out	(580)
Operating income	$1,633
Non-operating items	$0
Net income	$1,633

8,800-780-(8,800*2%) = 7844

5800-480+ ((1800+5300+480-350-((5300-350)*2%)-5800+480)-1500) = 5631

C-2)

REDD COMPANY

Statement of changes in stockholders’ equity

For the Year Ended December 31, 2018

Beginning common stock	7300
Plus: stock issued
Ending common stock		7300
Beginning retained earnings	2300
Plus: net income	1,633
Ending retained earnings		3933
Total stockholders’ equity		11233

C-3)

REDD COMPANY

Balance Sheet

As of December 31, 2018

Assets
Cash	9733
Merchandise inventory	1500
Total assets		11233
Liabilities
Stockholders’ equity
Common stock	7300
Retained earnings	3933
Total stockholders’ equity		11233
Total liabilities and stockholders’ equity		11233

7800-480-((5300-350-((5300-350)*2%)))-780-580+(8800-(8800*2%)) = 9733

C-4)

REDD COMPANY

Statement of Cash flows

For the Year Ended December 31, 2018

Cash flows from operating activities
Cash inflow from customers	7844
Cash outflow for inventory	(5331)
Cash outflow for expenses	(580)
Net cash flow from operating activities		1933
Cash flows from investing activities
Cash inflow from sale of land
Cash flows from financing activities
Net change in cash
Plus: Beginning cash balance		7800
Ending cash balance		9733

(8800-(8800*2%)) – 780 = 7844

480+((5300-350-((5300-350)*2%))) = 5331

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