Effect of inventory transactions on financial statements: perpetual system
Mark Dixon started a small merchandising business in 2012. The business experienced the following events during its first year of operation. Assume that Dixon uses the perpetual inventory system.
1. Acquired $40,000 cash from the issue of common stock.
2. Purchased inventory for $30,000 cash.
3. Sold inventory costing $20,000 for $32,000 cash.
a. Record the events in a statements model like the one shown below.
b. Prepare an income statement for 2012 (use the multistep format).
c. What is the amount of total assets at the end of the period?