The following events were completed by Dana’s Imports inSeptember 2018:

Sept.	1	Acquired $54,000 cash from the issue of common stock.
	1	Purchased $35,000 of merchandise on account with terms 2/10,n/30.
	5	Paid $1,000 cash for freight to obtain merchandise purchased onSeptember 1.
	8	Sold merchandise that cost $12,500 to customers for $18,000 onaccount, with terms 2/10, n/30.
	8	Returned $1,100 of defective merchandise from the September 1purchase to the supplier.
	10	Paid cash for the balance due on the merchandise purchased onSeptember 1.
	20	Received cash from customers of September 8 sale in settlementof the account balances, but not within the discount period.
	30	Paid $3,450 cash for selling expenses.

Required

1. Record each event in a statements model like the following one.In the Cash Flow column, use OA to designate operating activity, IAfor investment activity, FA for financing activity, or NC for netchange in cash. If the element is not affected by the event, leavethe cell blank. The first event is recorded as an example.

2. Prepare an income statement for the month ending September30.

3. Prepare a statement of cash flows for the month ending September30.

A.

DANA'S IMPORTS Effect of Transactions on FinancialStatements Using Horizontal Statements Model Date Balance Sheet Income Statement Statement of Cash Flows Assets = Liabilities + Stockholders’ Equity Revenue – Expenses = Net Income Cash + Accounts Receivable + Inventory = Accounts Payable + Common Stock + Retained Earnings 9/1 54,000 + + = + 54,000 + – = 54,000 FA 9/1 + + = + + – = 9/5 + + = + + – = 9/8a. + + = + + – = 9/8b. + + = + + – = 9/8c. + + = + + – = 9/10 + + = + + – = 9/20 + + = + + – = 9/30 + + = + + – = Total + + = + + – =

B.

Prepare an income statement for the month endingSeptember 30.

	DANA'S IMPORTS Income Statement For the Month Ended September 30,2018 Operating expenses

C.

Prepare a statement of cash flows for the monthending September 30. (Enter cash outflows as negativeamounts.)

	DANA'S IMPORTS Statement of Cash Flows For the Month ended September 30,2018 Cash flows from operatingactivities       Net cash flow from operatingactivities Cash flows from investingactivities Cash flows from financingactivities Net cash flow from financingactivities Net change in cash Ending cash balance