Effect of product versus general, selling, and administrative costs on financial statements Tyndal 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 $99,000 cash by issuing common stock.

2. Paid $18,750 for the materials used to make its products. All products started were completed during the period.

3. Paid salaries of $7,500 to selling and administrative employees.

4. Paid wages of $11,250 to production workers.

5. Paid $15,000 for furniture used in selling and administrative offices. The furniture was acquired on January 1. It had a $1,875 estimated salvage value and a seven-year useful life.

6. Paid $27,500 for manufacturing equipment. The equipment was acquired on January 1. It had a

$2,500 estimated salvage value and a five-year useful life.

7. Sold inventory to customers for $53,750 that had cost $31,250 to make.

Required Explain how these events would affect the balance sheet, income statement, and statement of cash flows by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example. In the Cash Flow column, indicate whether the amounts represent financing activities (FA), investing activities (IA), or operating activities (OA).

Management Accounting and Corporate Governance 45 L.O. 2, 3 L.O. 2, 3 Assets Equity Event Manuf. Office Com. Ret.

No. Cash Inventory Equip.* Furn.* Stk. Ear. Rev.  Exp. Net Inc. Cash Flow 1 99,000 99,000 99,000 FA

*Record accumulated depreciation as negative amounts in these columns.