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; transportation cost of $900 paid in cash. 4. Sold inventory on account that cost $38,000 for $71,000. 5. Transportation cost on the goods sold in Event 4 was $620. The goods were shipped FOB destination. Cash was paid for the transportation 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 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? If neither, label the transaction NA. Cost Transaction 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. (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 Income Statement Expense = Net Income Assets Revenue Statement of Cash Flow Events Cash Accounts Receivable Horizontal Statements Model for Year 1 Balance Sheet Liabilities Stockholders' Equity Accounts Common Retained Inventory + Payable Stock Earnings + 60,000 + 65,000/= 65,000 + + 900= + 60,000 + + = 60,000 FA 1. Stock 2. Pur inv. + + FA (900) + + + 3. Transport 4a. Sold inv. + 71,000+ = + + + = + + + 4b. Cost 5. Pd. tran. 6a. Ret. sale + + + + + = + + 6. Ret. inv + + + + = + + 7. Coll. AR 8. Pd. AP + + + + + + + 9. Pd. exp. 10 Pd. exp. + + + + End. bal. 59,100 + 71,000+ 65,900 65,000 + 60,000 + 0 0 = 0 60,000