The Pet Store experienced the following events for the Year 1 accounting period: 1. Acquired $50,000 cash from the issue of common stock. 2. Purchased $72,000 of inventory on account. 3. Received goods purchased in Event 2 FOB shipping point; transportation cost of $1,720 paid in cash. 4. Sold inventory on account that cost $56,000 for $107,000. 5. Transportation cost on the goods sold in Event 4 was $1,080. The goods were shipped FOB destination. Cash was paid for the transportation cost. 6. Customer in Event 4 returned $4,480 worth of goods that had a cost of $2,290. 7. Collected $87,740 cash from accounts receivable. 8. Paid $68,000 cash on accounts payable. 9. Paid $3,450 for advertising expense. 10. Paid $3,400 cash for insurance expense. Required: a. Which of these events affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA. Transaction Cost 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. b. Record each event in a horizontal financial statements model. The first event is recorded as an example. Note: In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the "Statement of Cash Flows" column may require an input - leave cells blank if there is no corresponding input needed. THE PET STORE Horizontal Statements Model for Year 1 Balance Sheet 1. Stock Events Assets Accounts Liabilities Stockholders' Equity Accounts Cash Receivable Inventory Payable Common Stock Retained Earnings Revenue 50,000 + + + 50,000 + + + + + + + 2. Purchased inventory 3. Transport 4a. Sold inventory 4b. Cost 5. Paid transportation 6a. Returned sale 6b. Returned inventory 7. Collected Accounts Receivable 8. Paid Accounts Payable 9. Paid expense 10. Paid expense Ending Balance + + + + + + + + + Income Statement Expense = Net Income Statement of Cash Flow 50,000 FA + + = 50,000+ 0 0 0+ 50,000+ 0 0 0 = 50,000