Gunn Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions.

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

2. Paid $9,200 for the materials used to make its products, all of which were started and completed during the year.

3. Paid salaries of $3,800 to selling and administrative employees.

4. Paid wages of $12,000 to production workers.

5. Paid $9,600 for furniture used in selling and administrative offices. The furniture was acquired on January 1. It had a $1,600 estimated salvage value and a four-year useful life.

6. Paid $16,000 for manufacturing equipment. The equipment was acquired on January 1. It had a $1,000 estimated salvage value and a five-year useful life.

7. Sold inventory to customers for $38,000 that had cost $18,000 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.

*Record accumulated depreciation as negative amounts in thesecolumns.

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inanclal Statements Model Assets Equity Event No. Manuf. Office Com. Ret. Cash + Inventory + Equip.* + Furn.*-Stk. + Ear. Rev.-Exp. Net Inc. 80,000 80,000