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2 Exercise 4-2A (Algo) Effect of inventory transactions on financial statements: Perpetual system LO 4-1 Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation Assume that Watson uses the perpetual inventory system, 1. Acquired $28,000 cash from the issue of common stock 2. Purchased inventory for $22.400 cash. 3. Sold Inventory costing $15,600 for $32,000 cash. ok Required a. Record the events in a horizontal financial statements model: b. Prepare an income statement for Year 1 (use the multistep format) c. What is the amount of total assets at tie end of the period? Complete this question by entering your answers in the tabs below. Required A Required B Required Record the events in a horizontal financial statements model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for not change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the Statement of Cash Flows court require an input. leave cells blank if there is no corresponding input needed.) Show Event Statement of Cash Flow + 1. 2 3a DAN WATSON MERCHANDISING Effect of Events on Financial Statement Balance Sheet Income Statement Assets Stockholders' Equity Common Retained Revenue Expenses Net Income Cash Inventory Stock Earnings 28.000 O (22,400) 32,000+ . 0 0 37,600 Required> FA OA 3b. Total O NG ale an income statement for Year 1 (use the multistep format). c. What is the amount of total assets at the end of the period? Complete this question by entering your answers in the tabs below. Required A Required B Required c Prepare an income statement for Year 1 (use the multistep format). DAN WATSON MERCHANDISING Income Statement For the Year Ended December 31, Year 1 0 - Purchased inventory for $22,400 cash. . Sold inventory costing $15,600 for $32,000 cash. Required a. Record the events in a horizontal financial statements model. b. Prepare an income statement for Year 1 (use the multistep format). c. What is the amount of total assets at the end of the period? Complete this question by entering your answers in the tabs below. Required A Required B Required C LLLLLLLLLLL What is the amount of total assets at the end of the period? Total assets $ 41,000

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