Question

At the beginning of 2018, the Redd Company had the following balances in its accounts: Cash Inventory Common stock Retained earnings $ 8,000 2,000 7,500 2,500 During 2018, the company experienced the following events: . Purchased inventory that cost $5,500 on account from Redd Company under terms 2/10, n/30.
1.The merchandise was delivered FOB shipping point. Freight costs of $500 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. Paid the amount due on its account payable to Redd Company within the cash discount period.
4. Sold inventory that had cost $6,000 for $9,000 on account, under terms 2/10, n/45.
5. Received merchandise returned from a customer. The merchandise originally cost $500 and was sold to the customer for $800 cash. The customer was paid $800 cash for the returned merchandise.
6. Delivered goods FOB destination in Event 4. Freight costs of $600 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Took a physical count indicating that $1,700 of inventory was on hand at the end of the accounting perioc

Answer 1

Answer:

Merchandise inventory   500 debit

         Cash                                500 credit

Accounts paaybles           350 debit

         Merchandise inventory       350 credit

Accounts payables     5150 debit

        Merchandise inventory  103 credit

        Cash                              5047 credit

Accounts Receivables 9000 debit

         Sales revenue            9000 credit

COGS              6000 debit

   Merchandise Inventory   6000 credit

Sales returns 800 debit

   Account receivables 800 credit

Merchandise inventory 500 debit

                 COGS                    500 credit

Fregith-out   600 debit

               Cash             600 credit

loss on possesion  753 debit

    merchandise inventory     753 credit

Explanation:

balance after the return:

5500 - 350 = 5150

discount 5150 x 2% = 103

cash disbursements: 5150 - 103 = 5047

balance after customer return:

9000 - 800 = 8200

discount 8200 x 2% = 164

cash proceeds 8036

Inventory accounting value:

beginning 2000

purchase  5500

fregiths       350

discount      103

sale         -6000

return         500

ending     2453

psysical count 1700

We recognize a loss for 753 dollars