The following events were completed by Danas Imports in September, Year 1:

September 1Acquired $50,000 cash from the issue of common stock.September 1Purchased $28,000 of merchandise on account with terms 2/10, n/30.September 5Paid $600 cash for freight to obtain merchandise purchased on September 1.September 8Sold merchandise that cost $15,000 to customers for $31,000 on account, with terms 2/10, n/30.September 8Returned $600 of defective merchandise from the September 1 purchase to the supplier.September 10Paid cash for the balance due on the merchandise purchased on September 1.September 20Received cash from customers of September 8 sale in settlement of the account balances, but not within the discount period.September 30Paid $2,450 cash for selling expenses.

Required:

Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is recorded as an example.

Prepare an income statement for the month ending September 30.

Prepare a statement of cash flows for the month ending September 30.