PROBLEM Magnificent Modems, Inc., makes modem cards that are used in notebook computers. The company completed the following transactions during 2014. All purchases and sales were made with cash. 1. Acquired $750,000 of cash from the owners. 2. Purchased $270,000 of manufacturing equipment. The equipment has a $30,000 salvage value and a four-year useful life. Label the purchase of the equipment as Event 2a and the recognition of depreciation as Event 2b. 3. The company started and completed 5,000 modems. Direct materials purchased and used amounted to $40 per unit. 4. Direct labor costs amounted to $25 per unit 5. The cost of manufacturing supplies used amounted to $4 per unit. 6. The company paid $50,000 to rent the manufacturing facility