Exercise 4-11A Effect of inventory losses: Perpetual system LO 4-5 Ho Designs experienced the following events during Year 1, its first year of operation: 1. Started the business when it acquired $59,000 cash from the issue of common stock. 2. Paid $21,700 cash to purchase inventory. 3. Sold inventory costing $12,100 for $26,600 cash. 4. Physically counted inventory, had inventory of $6,900 on hand at the end of the accounting period. Required a. Record the events in the T-accounts provided. b. Prepare an income statement and balance sheet. Record the events in the T-accounts provided. Cash Common Stock Beg Bal Beg Bal End. Bal End. Bal Merchandise Inventory Sales Revenue Beg Bal Beg Bal Bal End. Bal End Bal Cost of Goods Sold Bog Bal End. Bal Prepare an income statement. HO DESIGNS Income Statement For the Year Ended December 31, Year 1 Prepare a balance sheet. HO DESIGNS+ Balance Sheet December 31, Year 1 Assets Total assets Liabilities Stockholders' equity Total stockholders' equity Total liability and stockholders' equity