Effect of product versus selling, general, and administrative costs on financial statements Windsor Company experienced the following

Question:

Effect of product versus selling, general, and administrative costs on financial statements Windsor Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, all transactions were cash transactions.

1. Acquired $80,000 cash by issuing common stock.

2. Paid $15,000 for the materials used to make its products. All products started were completed during the period.

3. Paid salaries of $6,000 to selling and administrative employees.

4. Paid wages of $9,000 to production workers.

5. Paid $12,000 for furniture used in selling and administrative offices. The furniture was acquired on January

6. Paid $22,000 for manufacturing equipment. The equipment was acquired on January

1. It had a $2,000 estimated salvage value and a fi ve-year useful life.

7. Sold inventory to customers for $43,000 that had cost $25,000 to make.

Required

Explain how these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example.

Financial Statements Model Equity Assets Manuf. Office Cash + Inventory + Equip.* + Furn.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...