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. Acquired $30,000 cash from the issue of common stock.Purchased inventory for $24,000 cash.Sold inventory costing $16,100 for $30,500 cash. RequiredRecord the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank.Prepare an income statement for Year 1 (use the multistep format).What is the amount of total assets at the end of the period?

As per dual concept of accounting, every transaction has dual impact on the books of accounts.The…

Answered: Dan Watson started a small…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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.

Acquired $30,000 cash from the issue of common stock.
Purchased inventory for $24,000 cash.
Sold inventory costing $16,100 for $30,500 cash.

Required

Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank.
Prepare an income statement for Year 1 (use the multistep format).
What is the amount of total assets at the end of the period?

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