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 $25,000 cash from the issue of common stock.Purchased inventory for $20,000 cash.Sold inventory costing $15,900 for $29,000 cash. 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?

Answered: Dan Watson started a small…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter2: Asset And Liability Valuation And Income Recognition

Section: Chapter Questions

Problem 20PC: Analyzing Transactions. Using the analytical framework, indicate the effect of the following related...

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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 $25,000 cash from the issue of common stock.
Purchased inventory for $20,000 cash.
Sold inventory costing $15,900 for $29,000 cash.

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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