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)Twitter C How Many Questions IC x /newconnect mheduc nect html HP Connected U htps/wpleiey ESNahool oud acebookwiter At the beginning of 2018, the Redd Company had the following balances in its accounts Cash $7,800 1,880 7,380 2,300 Common stock Retained earnings During 2018, the company experienced the following events 1. Purchased inventory that cost $5300 on account from Redd Company under terms 2/o. n30 The merchandise was delivered FOB shipping point. Freight costs of $480 were paid in cash 2 Returned $350 of the inventory that it hed 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 $5,800 for $8,800 on account, under terms 2/10, n/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 1. Prepare a multistep income statementExplanation / Answer
REDD COMPANY REDD COMPANY REDD COMPANY REDD COMPANY Multi Step income Statement Statement of changes in stock holders Equity Balance sheet Statement of cash flows For the year ended December 31, 2018 Amount in $ Amount in $ For the year ended december 31, 2018 as of december 31, 2018 For the year ended december 31, 2018 Net sales ($8800 -$780) 8020 Amount in $ Amount in $ Amount in $ Amount in $ Amount in $ Cost of goods sold (5800 -$480) 5320 beginning Common stock 7300 Assets cash flow from Operating activities Gross margin 2700 Plus : Stock issued 0 cash (7800-480-4851-580+7860) 9749 cash inflow from Customers 7860 Operating expenses Ending common stock 7300 inventory 1500 Cash outflow for inventory -4851 Transportation out (480+580) 1060 Cash outflow for expenses -1060 Net Discount (160-99) 61 Beginning retained Earnings 2300 Total Assets 11249 Net cash flow from operating activities 1949 Operating income 1579 Plus Net income 1649 Add: Increase in inventory (1500-1430) 70 Ending Retained Earnings 3949 cash flow investing activities - Net income 1649 Total Stock holders equity 11249 Liabilities Stock Holders equity Common stock 7300 Cash flow finanancing activities - Retained Earnings 3949 Total stock holders equity 11249 Total Liabilities & Stock Holders equity 11249 Net change in cash 1949 Plus beginning cash Balance 7800 Ending cash Balance 9749
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