Problem 1-21A (Algo) Effect of product versus period costs on financial statements LO 1-3 Perez Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions and that financial statement data are prepared in accordance with GAAP. 1. Acquired $60,000 cash by issuing common stock. 2. Paid $7,400 for the materials used to make its products, all of which were started and completed during the year. 3. Paid salaries of $4,200 to selling and administrative employees. 4. Paid wages of $6,100 to production workers. 5. Paid $3,500 for furniture used in selling and administrative offices. The furniture was acquired on January 1. It had a $1,100 estimated salvage value and a two-year useful life. 6. Paid $7,800 for manufacturing equipment. The equipment was acquired on January 1. It had a $1,800 estimated salvage value and a two-year useful life. 7. Sold inventory to customers for $25,400 that had cost $13,700 to make. Required How these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example. (Enter decreases to account balances with a minus sign.) Required How these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example. (Enter decreases to account balances with a minus sign.) Balance Sheet Income Statement Event No. Assets Manuf. + Inventory + Equip. Equity Common + 1 Cash Office Furn. Ret. 2 Rev. - Exp. = Net Inc. Ear. stock 60,000 + 60,000 + + + + + + + + + + + + + + + + + + + + + + + + + + + 6b + + + + 7a + + + + 7b + + + + Total 60,000 + + 0 + + 0 + 0 = 60,000 + 0 0