Exercise 3-4A (Static) Effect of inventory transactions on the income statement and statement of cash flows: Perpetual system LO 3-1 During Year 1, Hardy Merchandising Company purchased $40,000 of inventory on account. Hardy sold Inventory on account that cost $24,500 for $38,000. Cash payments on accounts payable were $22,000. There was $26,000 cash collected from accounts receivable. Hardy also paid $5,100 cash for operating expenses. Assume that Hardy started the accounting period with $20,000 in both cash and common stock. 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 irrcash. If the element is not affected by the event, leave the cell blank. b. What is the balance of accounts receivable at the end of Year 1? c. What is the balance of accounts payable at the end of Year 1? d. What are the amounts of gross margin and net income for Year 1? e. Determine the amount of net cash flow from operating activities. Complete this question by entering your answers in the tabs below. Req A Req B to E Record the events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA fom the element is not affected by the event, leave the cell blank. (Not every cell will require entry. Enter any decreases to account balances and cash out HARDY MERCHANDISING COMPANY Effect of Events on the Financial Statements Balance Sheet + Income Statement Event Assets Liabilities + Stockholders' Equity Accounts Cash +Inventory M Receivable Accounts Payable Common Stock Retained Revenue Expenses Earnings Net Statement of Cash Flows Income Beg. bal. 20,000+ 20,000+ 1. + 20. + 2b. . . 3. 4. 5: + End. bal. $ 20,000+ $ 0+ $ 0 $ 0 $ 20,000+ $ 0 $ 0- $ 0-$ 0 $ 0 Reg Req B to E> Complete this question by entering your answers in the tabs below. Req A Req B to E What is the balance of accounts receivable, accounts payable, amounts of gross margin, net income and net cash flow from operating activities at the end of Year 1? (Indicate cash outflows with minus sign.) b. Accounts receivable c. Accounts payable d. Gross margin Net income e. Net cash flow from operating activities