Required information Problem 3-26A (Algo) Comprehensive cycle problem: Perpetual system LO 3-2, 3-3, 3-4, 3-5, 3-6, 3-7 (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 Inventory Common stock Retained earnings $7,800 1,800 7,300 2,300 During Year 2, the company experienced the following events: 1. Purchased inventory that cost $5.300 on account from Ross Company under terms 2/10, n/30. The merchandise was delivered FOB shipping point. Freight costs of $480 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 Ross 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. Problem 3-26A (Algo) Part a Required a. Identify these events as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE). Event 1a (Purchase inventory). 1b. (Shipping cost). 2 3. 4a (Recording revenue) 4b. (Recording cost of goods sold). Sa (Reversing revenue). 5b (Reversing cost of goods sold). 6. 7. 8 Classification