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

a. 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