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: During Year 2, the company experienced the following events: 1. Purchased inventory that cost $6,200 on account from Ross Company under terms 2/10,n/30. The merchandise was delivered FOB shipping point. Freight costs of $570 were paid in cash. 2. Returned $300 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 $6,700 for $9,700 on account, under terms 2/10,n/45. 5. Received merchandise returned from a customer. The merchandise originally cost $570 and was sold to the customer for $870 cash. The customer was paid $870 cash for the returned merchandise. 6. Delivered goods FOB destination in Event 4. Freight costs of $670 were paid in cash. 7. Collected the amount due on the account receivable within the discount period. 8. Took a physical count indicating that $2,400 of inventory was on hand at the end of the accounting period. Prepare a multistep income statement. \begin{tabular}{|c|c|c|c|c|} \hline Req C1 & Req C2 & Req C3 & Req C4 & \\ \hline \multicolumn{5}{|c|}{ Prepare a balance sheet. } \\ \hline \multicolumn{5}{|c|}{ REDD COMPANY } \\ \hline \multicolumn{5}{|c|}{ Balance Sheet } \\ \hline \multicolumn{5}{|c|}{ As of December 31, Year 2} \\ \hline \multicolumn{5}{|l|}{ Assets } \\ \hline \multicolumn{5}{|l|}{ Cash } \\ \hline \multicolumn{5}{|c|}{ Merchandise inventory } \\ \hline & & & & \\ \hline \multicolumn{3}{|l|}{ Total assets } & $ & 0 \\ \hline \multicolumn{5}{|l|}{ Liabilities } \\ \hline \multicolumn{5}{|c|}{ Stockholders' Equity } \\ \hline \multicolumn{5}{|c|}{ Common stock } \\ \hline \multicolumn{5}{|c|}{ Retained earnings } \\ \hline \\ \hline \multicolumn{3}{|c|}{ Total stockholders' equity } & $ & 0 \\ \hline \multicolumn{3}{|c|}{ Total liabilities and stockholders' equity } & $ & 0 \\ \hline \end{tabular} Prepare a statement of cash flows. Note: Cash outflows should be indicated with a minus sign. Prepare a statement of changes in stockholders' equity