Effect of product versus general, selling, and administrative costs on financial statements Required Dunn Plastics Company accrued a tax liability for $2,500. Use the following horizontal financial statements model to show the effect of this accrual under the following two assumptions: (1) the tax is on administrative buildings or (2) the tax is on production equipment. Use plus signs and/or minus signs to show the effect on each element. If an element is not affected, indicate so by placing the letters NA under the appropriate heading.

40 Chapter 1 Product/ Asset/

Cost Category G, S, & A Expense Cost of a delivery truck G, S, & A Asset Cash dividend to stockholders Cost of merchandise shipped to customers Depreciation on vehicles used by salespeople Wages of administrative building security guards Supplies used in the plant manager’s office Computers for the accounting department Depreciation on computers used in factory Natural gas used in the factory Cost of television commercials Wages of factory workers Paper and ink cartridges used in the cashier’s office Raw material used to make products Lubricant used to maintain factory equipment L.O. 3 L.O. 3 Assets Liab. Equity Rev.  Exp. Net Inc. Cash Flow 1.

2.