Reid Electronics Company experienced the following events during its first accounting period.

1. Received $120,000 cash by issuing common stock.

2. Paid $18,000 cash for wages to production workers.

3. Paid $9,000 for salaries to administrative staff.

4. Purchased for cash and used $9,000 of raw materials.

5. Recognized $1,000 of depreciation on administrative offices.

6. Recognized $1,500 of depreciation on manufacturing equipment.

7. Recognized $48,000 of sales revenue from cash sales of products.

8. Recognized $30,000 of cost of goods sold from the sale referenced in Event 7.

Required

Use a horizontal financial statements model to show how each event affects the balance sheet and income statement. Indicate whether the event increases (I), decreases (D), or does not affect (NA) each element of the financial statements. The first transaction is shown as an example. (Note: Show accumulated depreciation as a decrease in the book value of the appropriate asset account.)

Transcribed Image Text:

Equity Assets Event Adm. Ret. Manuf. Com. Stk. + Ear. NA No. Cash + Inventory + Equip. + Offices Exp. Net Inc. %3D Rev. NA NA NA 1. NA NA NA