Chappell Industries recognized the annual cost of depreciation on December 31, 2007. Using the following horizontal financial statements model, indicate how this event affected the company’s financial statements under the following two assumptions: (1) the depreciation was on office furniture and (2) the depreciation was on manufacturing equipment. Indicate whether the event increases (I), decreases (D), or has no affect (NA) on each element of the financial statements. Also, in the Cash column, indicate whether the cash flow is for operating activities (OA), investing activities (IA), or financing activities (FA).

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Assets Equity Event No. Manuf. Office Com. Ret. Cash + Inventory + Equip. + Furn. == Stk. + Earn. Rev. Exp. = Net Inc. Cash Flow 1 2