Question

The Pet Store experienced the following events for the 2018 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; freight cost of $900 paid in cash.

4. Sold inventory on account that cost $38,000 for $71,000.

5. Freight cost on the goods sold in Event 4 was $620. The goods were shipped FOB destination. Cash was paid for the freight 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

1. Which of these events affect period (selling and administrative) costs? Which result in product costs? If neither, label the transaction NA.

2. Record the above events in a horizontal statement model. In the Cash Flow column, use OA to designate operating activity, IA for investment activity, FA for financing activity, or NC for net change in cash. If the element is not affected by the event, leave the cell blank. The beginning balances have been recorded as an example.

Complete this question by entering your answers in the tabs below. Record the above events in a horizontal statement model. In the Cash Flow column, use DA to designate operating activity, IA for investment activity, FA for financing acti in cash. If the element is not affected by the event, leave the cell blank The beginning balances have been recorded as an example. (Not all cells will require entry) 00:42 THE PET STORE Horizontal Statement Model for 2018 Stockholders' Equity Inventory O

Answer 1

Pet Store
Horizontal Models Statement (amounts in $)
	Balance Sheet	Income Statement	statement of cash flow
	Assets		Liabilities		Stockholders Equity	revenue		expenses		net income
event	cash	+	accounts receivable	+	inventory	=	accounts payable	+	common stock	+	retained earnings	-	=
1	60000	+		+				+	60000				-				FA
2		+		+	65000		65000	+					-				NA
3	-900	+		+	900			+					-				OA
4.a		+	71000	+				+			71000	71000	-	0		71000	NA
4.b		+		+	-38000			+			-38000	0	-	38000		-38000	NA
5	-620	+		+				+			-620	0	-	620		-620	OA
6.a	-4200	+		+				+			-4200	-4200	-			-4200	OA
6.b		+		+	2150			+			2150	0	-	-2150		2150	NA
7	58300	+	-58300	+				+					-				OA
8	-59200	+		+			-59200	+					-				OA
9	-2600	+		+				+			-2600	0	-	2600		-2600	OA
10	-3100	+		+				+			-3100	0	-	3100		-3100	OA
Bal	47680	+	12700	+	30050		5800	+	60000		24630	66800	-	42170		24630