[Solved 100% Accurate] Acg2021C: Chapter 04 Practice Problems (Mandatory Homework Solved!!)
$10Course: ACG2021C Financial Accounting
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.]
At the beginning of Year 2, the Redd Company had the following balances in its accounts:
Cash | $ | 14,800 |
Inventory | 7,000 | |
Land | 3,500 | |
Common stock | 13,000 | |
Retained earnings | 12,300 | |
During Year 2, the company experienced the following events:
- Purchased inventory that cost $12,700 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $950 were paid in cash.
- Returned $700 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.
- Paid the amount due on its account payable to Ross Company within the cash discount period.
- Sold inventory that had cost $10,000 for $19,000 on account, under terms 2/10, n/45.
- Received merchandise returned from a customer. The merchandise originally cost $1,950 and was sold to the customer for $2,600 cash. The customer was paid $2,600 cash for the returned merchandise.
- Delivered goods FOB destination in Event 4. Freight costs of $840 were paid in cash.
- Collected the amount due on the account receivable within the discount period.
- Sold the land for $6,500.
- Recognized accrued interest income of $450.
- Took a physical count indicating that $4,600 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.)