Question

Required Information The following Information applies to the questions displayed below At the beginning of Year 2, the Redd Company had the folloing balances In Its accounts: s 6,989 15,889 7,889 15,690 13,999 Cash Land Conmoni stock Retained earnings During Year 2, the company experienced the following events: 1. Purchased Inventory that cost $5,200 on account from Ross Company under terms 110, n 30. The merchandise was dellvered FOB shipping point. Frelght costs of $190 were pald 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 frelght cost. 3. Pald the amount due on ts account payable to Ross Company wlthin the cash discount perlod. 4 Sold Inventory that had cost $6,800 for $12.100 on account, under terms 210, n/45 5. Recelved merchandise returned from a customer. The merchandise orlginally cost $900 and was sold to the customer for $1,680 cash. The customer was pald $1,680 cash for the returned merchandise. 6. Delivered goods FOB destination In Event 4. Frelght costs of $140 were pald In cash. 7. Collected the amount due on the account recelvable within the discount perlod. 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 perlod. (Hint Determine the current balance In the Inventory account before calculating the amount of the Inventory write down.) b. Record the events In general Journal format. Assume that the perpetual Inventory method and gross method Is used. (If no entry Is required for a transaction/event, select "No Journal entry required" in the first account field.) new transaction lst Journal entry worksheet 123 5 6 7 8 15 Record entry inventory purchased on account from Ross company terms 1/10, n/30 Note: Enter debits before credits. Record entry Clear entry Vew general journal

Answer 1

1)	Merchandise inventory	5200
	Accounts payable		5200
	Merchandise inventory	190
	Cash		190
2)	Accounts payable	400
	Merchandise inventory		400
3)	Accounts payable	4800
	Merchandise inventory (4800*1%)		48
	Cash		4752
4)	Accounts receivable	12100
	Sales		12100
	Cost of goods sold	6800
	Merchandise inventory		6800
5)	Sales returns and allowances	1680
	Cash		1680
	Merchandise inventory	900
	Cost of goods sold		900
6)	Freight outwards	140
	Cash		140
7)	Cash (12100*98%)	11858
	Sales discount (12100*2%)	242
	Accounts receivable		12100
8)	Cash	8500
	Gain on sale of land		1500
	Land		6000
9)	Interest receivable	600
	Interest income		600
10)	Loss due to shortage of inventory (14042-13400)	642
	Merchandise inventory		642
	[Inventory balance = 15000+5200+190-400-48-6800+900 = 14042]	14042