Question
Dan Watson started a small merchandising business in 2018. The business experienced the following events during its first year of operation. Assume that Watson uses
Dan Watson started a small merchandising business in 2018. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system.
Acquired $30,500 cash from the issue of common stock.
Purchased inventory for $24,400 cash.
Sold inventory costing $15,200 for $32,000 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, NC for net change in cash and NA to indicate the element is not affected by the event.
Prepare an income statement for 2018 (use the multistep format).
What is the amount of total assets at the end of the period?
| Event | Assets | Assets |
| Stckhldrs Eq. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash | + | Inventory | = | Common Stock | + | Ret. Earnings
| Rev | - | Exp | = | Net Inc | Csh Flow | Cash Flow | |
| 1 | ||||||||||||||
| 2 | ||||||||||||||
| 3a | ||||||||||||||
| 3b | ||||||||||||||
| Total |
Prepare an income statement for 2018 (use the multistep format).
| DAN WATSON MERCHANDISING | |
| Income Statement | |
| For the Year Ended December 31, 2018 | |
| 0 | |
| Operating expenses | |
| $0 | |
What is the amount of total assets at the end of the period?
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