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.
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Assets
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=
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Equity
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Rev.
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-
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Exp.
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=
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Net Inc.
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Cash Flow
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Cash
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+
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Inv.
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=
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Com. Stk.
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+
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Ret. Earn.
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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?