Trammell Manufacturing experienced the following events during its first accounting period.

1. Recognized depreciation on manufacturing equipment.

2. Recognized depreciation on office furniture.

3. Recognized revenue from cash sale of products.

4. Recognized cost of goods sold from sale referenced in Event 3.

5. Acquired cash by issuing common stock.

6. Paid cash to purchase raw materials that were used to make products.

7. Paid wages to production workers.

8. Paid salaries to administrative staff.

Required:
Use the following horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. Indicate whether the event increases (I), decreases (D), or has no effect (NA) on each element of the financial statements. In the Cash Flow column, indicate whether the cash flow is for operating activities (OA), investing activities (IA), or financing activities (FA). The first transaction has been recorded as an example.

Transcribed Image Text:

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