Justin Harris started a small merchandising business in 2006. The business experienced the following events during its first year of operation. Assume that Harris uses the perpetual inventory system.

1. Acquired \($30,000\) cash from the issue of common stock.

2. Purchased inventory for \($25,000\) cash.

3. Sold inventory costing \($18,000\) for \($28,000\) cash.

Required:

a. Record the events in a statements model like the one shown below.

b. Prepare an income statement for 2006 (use the multistep format).

c. What is the amount of total assets at the end of the period?

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Assets Equity Rev. - Exp. = Net Inc. Cash Flow Cash + Inv. = Com. Stk. + Ret. Earn.