3-22A (Algo) Effect of purchase returns and allowances and purchase discounts on the financial statements: Perpetual system LO 3-2, 3-3 The following events were completed by Dana's Imports in September, Year 1: Sept. 1 Acquired $48,000 cash from the issue of common stock. 1 Purchased $32,000 of merchandise on account with terns 2/10, n/30. 5 Paid $700 cash for freight to obtain merchandise purchased on September 1. 8 Sold merchandise that cost $11,000 to customers for $18,500 on account, with terms 2/10, n/30. 8 Returned $1,000 of defective merchandise from the September 1 purchase to the supplier. 10 Paid cash for the balance due on the merchandise purchased on September 1. 20 Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period, 30 Paid $3,150 cash for selling expenses. Required a. Record each event in a statements model like the following one. 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. The first event is recorded as an example. b. Prepare an income statement for the month ending September 30. c. Prepare a statement of cash flows for the month ending September 30. Complete this question by entering your answers in the tabs below. Record each event in a statements model like the following one. In the Cash Flow column, use OA to designate operating activity, IA for investment activity change in cash. If the element is not affected by the event, leave the cell blank. The first event is recorded as an example. (Not every cell will require entry and cash outflows with a minus sign.) DANA'S IMPORTS Effect of Transactions on Financial Statements Using Horizontal Statements Model Balance Sheet Date Assets Cash + Accounts Receivable 9/1 48,000+ + 9/1 + 95 9/8a 986 9/8c 9/10 9/20 9:30 Total Income Statement Liabilities + Accounts Stockholders' Equity Inventory Payable Common Stock Retained Earnings Revenue Expenses Net Income Statement of Cash Flows 48,000+ 48.000 FA Required A Required B > Required Required B Required C Prepare an income statement for the month ending September 30. DANA'S IMPORTS Income Statement For the Month Ended September 30, Year 1 Operating expenses < Required A Required C > Required A Required B Required C Prepare a statement of cash flows for the month ending September 30. (Cash outflows should be indicated with a minus sign.) DANA'S IMPORTS Statement of Cash Flows For the Month ended September 30, Year 1 Cash flows from operating activities Net cash flow from operating activities Cash flows from investing activities: Cash flows from financing activities: Net cash flow from financing activities Net change in cash Ending cash balance