Effect of inventory transactions on journals, ledgers, and 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.
Required
a. Record the events in general journal format.
b. Post the entries to T-accounts.
c. Prepare an income statement for 2012 (use the multistep format).
d. What is the amount of net cash flow from operating activities for 2012?
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