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Exercise 4-3A Effect of inventory transactions on the income statement and statement of cash flows: Perpetual system LO 4-1 During Year 1, Hardy Merchandising Company purchased $26,000 of inventory on account. Hardy sold inventory on account that cost $19,500 for $29,300. Cash payments on accounts payable were $16,300. There was $26,100 cash collected from accounts receivable. Hardy also paid $4,600 cash for operating expenses. Assume that Hardy started the accounting period with $21,000 in both cash and common stock. Required a. Identify the events described in the preceding paragraph and show them in a horizontal statements model. The first event is recorded as an example b. What is the balance of accounts receivable at the end of Year 1? c. What is the balance of accounts payable at the end of Year 1? d. What are the amounts of gross margin and net income for Year 1? e. Determine the amount of net cash flow from operating activities. Income Statement Net Income Statement of Cash Flows Revenue Expenses 0 0 0 NA NA NA NA 29,300 29,300 19,500 (19,500) 26,100FA 4,600 (4,600) 4,600) OA 29,300 24,100 - 5,200 21,500 Identify the events described in the preceding paragraph and record them in a horizontal statements model. The first event i financing activities, "NC" for net change in cash and "NA" for not affect. Enter any decreases to account balances with a minu HARDY MERCHANDISING COMPANY Effect of Events on the Financial Statements Balance Sheet Assets Liabilities Stockholders' Equity Accounts Receivable Accounts Payable Common Stock Retained Events Cash Inventory Earnings Beg bal Pur inv Sold inv Inv cost Pd AP | (16,300) Coll AR Pd ex End bal 21,000 21,000 26,000 26,000 2a 29,300 29,300 2b (19,500) (19,500) (16,300) 26,100 (4,600) 26,200 + 4 (26,100) (4,600) 3,200+ 6,500 - 9,700+ 21,000+ 5,200