Exercise 4-2B Effect of inventory transactions on financial statements: perpetual system Sara Bayer started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Bayer uses the perpetual inventory system. 1. Acquired $50,000 cash from the issue of common stock. 2. Purchased inventory for $22,000 cash. 3. Sold inventory costing $18,000 for $28,000 cash. Required a. Record the events in a horizontal financial statements model like the one shown next. Balance Sheet Income Statement Assets Stk. Equity Statement of Cash Flows Cash + Inv. Com. Stk. Ret. Earn. Rev. Exp. Net Inc. b. Determine the amount of gross margin. c. What is the amount of total assets at the end of the period? b. Sara Bayer Merchandising Effect of Events on Financial Statements Assets Equity Rev. Exp. = Net. Inc. Cash Flow No. Cash Inv. 1. 50,000+ NA = C. Stock 50,000+ Ret. Earn. NA NA NA= NA 50,000 FA 2. 3a. 3b. Tot. Net Sales Sara Bayer Merchandising Income Statement For the Year Ended December 31, Year 1 Gross Margin C. Total assets: