Exercise 3-3A (Algo) Effect of inventory transactions on financial statements: Perpetual system LO 31 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 $25,500 cash from the issue of common stock. 2. Purchased inventory for $20,400 cash. 3. Sold inventory costing $15,900 for $29,500 cash. Required a. 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, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. b. Prepare an income statement for Year 1 (use the multistep format). c. What is the amount of total assets at the end of the period? Complete this question by entering your answers in the tabs below. 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 account balances and cash outflows with a minus the elemt is not affected by the event, leave the cell blank. (Not every cell will require entry. Enter any decreases to Complete this question by entering your answers in the tabs below. Prepare an income statement for Year 1 (use the multistep format). Complete this question by entering your answers in the tabs below. What is the amount of total assets at the end of the period