Problem II - Recording events in horizontal statements model The beginning account balances for Terry's Auto Shop as of January 1,2018, follows: 25 Points Cash Inventory Common Stock 6,020 3,030 7,440 1,610 Retained Earnings The following events affected the company during the 2018 accounting period: 1. Purchased merchandise on account that cost $4,150. 2. The goods in Event I were purchased FOB shipping point with freight cost of $280 cash. 3. Returned $465 of damaged merchandise for credit on account. 4. Agreed to keep other damaged merchandise for which the company received an $265 allowance Sold merchandise that cost $2,660 for $4,940 cash. Delivered merchandise to customers in Event 5 under terms FOB destination with freigh costs amounting to $190 cash. 5. 6. 7. Paid $2,870 on the merchandise purchased in Event 1. Required Record the events in a horizontal financial statements model. Problem III Identifying product and period costs Required Indicate whether each of the following costs is a product cost or a period (selling and administrative) cost: 10 Points a. Goods purchased for resale. b. Salaries of salespersons. c. Advertising costs. d. Transportation-out. e. Interest on a note payable. f. Salary of the company president. g. Transportation-in. h. Insurance on the office building. i. Office supplies. j. Costs incurred to improve the quality of goods available for sale