The police department received complaints of narcotic sales at the apartment in the 500-block of Ingram, according to a Dayton police report.
Upon arriving at the house around 10:15 a.m. Friday, officers were given permission by Davis to search the home after they located suspected crack cocaine and numerous torn baggies on the floor of an upstairs bedroom, the report states.
Smith told police that drug activity goes on in the rear parking lot of the apartment, but not inside, according to the report.
Police said four children under age 7 were inside the apartment.
Officers located heroin, cocaine, syringes and other tools used to manufacture drugs in various places throughout the apartment.
A loaded handgun was also located inside the residence.
Smith was booked into the Montgomery County Jail on suspicion of possession and illegal manufacturing of drugs and child endangering.
Davis was summoned to court for permitting drug abuse and child endangerment.