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 $28,000 cash from the issue of common stock.

Purchased inventory for $22,400 cash.

Sold inventory costing $16,400 for $30,500 cash.

Required

Record the events in general journal format.

Post the entries to T-accounts.

Determine the amount of gross margin.

What is the amount of net cash flow from operating activities for Year 1?