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Exercise 4-2A Effect of inventory transactions on journals, ledgers, and financial statements: Perpetual system LO 4-1 Dan Watson started a small merchandising business in Year 1. The business experienced the following events during its first year of operation. Assume that Watson uses the perpetual inventory system. Acquired $27,500 cash from the issue of common stock. Purchased inventory for $22,000 cash. Sold inventory costing $15,600 for $30,500 cash. Required. Record the events in general journal format. b. Post the entries to T-accounts. c. Determine the amount of gross margin. d. What is the amount of net cash flow from operating activities for Year 1
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