Exercise 3-9A (Algo) Effect of product cost and period cost: Horizontal statements model LO 3-1, 3-2, 3-4 es The Pet Store experienced the following events for the Year 1 accounting period 1. Acquired 95,000 cash from the issue of common stock. 2. Purchased84,000 of inventory on account. 3. Received goods purchased in Event 2 FOB shipping point; freight cost of 1,050 paid in cash. 4. Sold inventory on account that cost42,000 for 79,000. 5. Freight cost on the goods sold in Event 4 was1,360. The goods were shipped FOB destination. Cash was paid for the freight cost. 6. Customer in Event 4 returned 5,320 worth of goods that had a cost of2,710. 7. Collected 64.780 cash from accounts receivable. 8. Paid63.200 cash on accounts payable. 9. Paid 2,690 cash for advertising expense. 10. Paid4.090 cash for insurance expense. Required: a. Which of these events affect period (selling and administrative) costs? Which result in product costs? b. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). The first event is recorded as an example
