The Pet Store experienced the following events for the Year 1 accounting period: 1. Acquired $100,000 cash from the issue of common stock. 2. Purchased $70,000 of inventory on account. 3. Received goods purchased in Event 2 FOB shipping point; freight cost of $1,080 paid in cash. 4. Sold inventory on account that cost $50,000 for $95,000. 5. Freight cost on the goods sold in Event 4 was $1,530. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in Event 4 returned $4,400 worth of goods that had a cost of $2,250. 7. Collected $77,900 cash from accounts receivable. 8. Paid $61,000 cash on accounts payable. 9. Paid $3,100 for advertising expense. 10. Paid $3,820 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. 5. 6. 7 8. 9. 10. b. Record each event in a horizontal 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, NC for net change in cash, and NA to indicate the element not affected by the event. Enter any decreases to account balances and cash outflows with a minus sign.) Assets Accounts Receivable THE PET STORE Horizontal Statements Model for Year 1 Balance Sheet Liabilities Stockholders' Equity Accounts Common Retained Inventory + Payable Stock Earnings + 100,000 + Revenue Income Statement - Expense = Net Income Statement of Cash Flow Events Cash + + + 100.000 + + 100.000 FA + + + + + = + - 1. Stock 2. Pur inv. 3. Freight 4a. Sold inv. 4b. Cost 5. Pd. frt. + + - + + + + + + + - 6a. Ret. sale + + + - 6b. Ret. Inv + + + - + T + + - 7. Coll. AR 8. Pd. AP + + + + + + + 9. Pd. exp. 10 Pd. exp. End Bal. + + 100,000 + 0 + 0 1 = 0 + 100,000 + 0 O- 0 = 0 100.000