Effect of accounting events on financial statements Required Use a horizontal statements model to show how each of the following independent accounting events affects the elements of the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I), decreases (D), or does not affect (NA) each element of the financial statements.

Also designate the classification of cash flows using the letters OA for operating activities, IA for investing activities, and FA for financing activities. The first two transactions are shown as examples.

a. Paid cash to purchase raw materials.

b. Recorded cash sales revenue.

c. Applied overhead to Work in Process Inventory based on the predetermined overhead rate.

d. Closed the Manufacturing Overhead account when overhead was underapplied.

e. Recognized cost of goods sold.

f. Recognized depreciation expense on manufacturing equipment.
g. Purchased manufacturing supplies on account.
h. Sold fully depreciated manufacturing equipment for the exact amount of its salvage value.