[Solved 100% Accurate] Acg2021C: Chapter 04 Practice Problems (Mandatory Homework Solved!!)

Course: ACG2021C Financial Accounting

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Problem 4-26A Comprehensive cycle problem: Perpetual system LO 4-2, 4-3, 4-4, 4-5, 4-6, 4-7

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At the beginning of Year 2, the Redd Company had the following balances in its accounts:
 

 
During Year 2, the company experienced the following events:
 

1. 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.
2. 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.
3. Paid the amount due on its account payable to Ross Company within the cash discount period.
4. Sold inventory that had cost $10,000 for $19,000 on account, under terms 2/10, n/45.
5. 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.
6. Delivered goods FOB destination in Event 4. Freight costs of $840 were paid in cash.
7. Collected the amount due on the account receivable within the discount period.
8. Sold the land for $6,500.
9. Recognized accrued interest income of $450.
10. 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.)