Exercise 3-9A (Static) Effect of product cost and period cost: Horizontal statements model LO 3-1, 3-2, 3- 4 The Pet Store experienced the following events for the Year 1 accounting period: 1. Acquired $60,000 cash from the issue of common stock. 2. Purchased $65,000 of inventory on account. 3. Received goods purchased in Event 2 FOB shipping point; freight cost of $900 paid in cash. 4. Sold inventory on account that cost $38,000 for $71,000. 5. Freight cost on the goods sold in Event 4 was $620. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in Event 4 returned $4,200 worth of goods that had a cost of $2,150. 7. Collected $58,300 cash from accounts receivable. 8. Paid $59,200 cash on accounts payable. 9. Paid $2,600 cash for advertising expense. 10. Paid $3,100 cash for insurance expense. Required a. Which of these events affect period (selling and administrative) costs? Which result in product costs? b. Record the above events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. The first event is recorded as an example. Complete this question by entering your answers in the tabs below. Required A Required B Which of these events affect period (selling and administrative) costs? Which result in product costs? (Not all cells require entry.) Transaction 1. Cost 2. 3. 4. 5. 6. 7. 8. 9. 10. Required A Required B > Required A Required B Record the above events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing acti In cash. If the element is not affected by the event, leave the cell blank. The first event is recorded as an example. (Enter any decreases to account balances and cash ou Not all cells require entry.) THE PET STORE Horizontal Statements Model for Year 1 Balance Sheet Assets Accounts Receivable Inventory- Liabilities Accounts Payable 60,000+ Event 1. 2 3. Cash 4a. 4b. 5. 6a. 6b. . 7. 9. + Stockholders' Equity Income Statement Net Statement of Cash Flows Income Common Retained Revenue Expenses Stock Earnings 60,000+ " = 60.000 FA 10. Bal. 60,000+ 0+ 0 0+ 60,000+ 0 0 0 0 60,000