Effect of inventory transactions on financial statements: perpetual system
Chris Daniels started a small merchandising business in 2010. The business experienced the following events during its first year of operation. Assume that Daniels uses the perpetual inventory system.
1. Acquired $60,000 cash from the issue of common stock.
2. Purchased inventory for $50,000 cash.
3. Sold inventory costing $36,000 for $56,000 cash.
Required
a. Record the events in a statements model like the one shown below.
|
Assets |
= |
Equity |
Rev. |
Exp. |
= |
Net Inc. |
Cash Flow |
|||||
|
Cash |
+ |
Inv. |
= |
Com. Stk. |
+ |
Ret. Earn. |
||||||
b. Prepare an income statement for 2010 (use the multistep format).
c. What is the amount of total assets at the end of the period?