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.

1. Acquired $32,500 cash from the issue of common stock.
2. Purchased inventory for $26,000 cash.
3. Sold inventory costing $16,200 for $32,000 cash.

Required

1. Record the events in general journal format.
2. Post the entries to T-accounts.
3. Determine the amount of gross margin.
4. What is the amount of net cash flow from operating activities for Year 1?