Question

Wilson Co. experienced the following events for the 2013 accounting period:
1. Acquired $20,000 cash from the issue of common stock.
2. Purchased $36,000 of inventory on account.
3. Received goods purchased in Event 2 FOB shipping point. Freight cost of $900 paid in cash.
4. Returned $4,000 of goods purchased in Event 2 because of poor quality.
5. Sold inventory on account that cost $28,000 for $82,000.
6. Freight cost on the goods sold in Event 5 was $200. The goods were shipped FOB destination. Cash was paid for the freight cost.
7. Collected $33,000 cash from accounts receivable.
8. Paid $27,000 cash on accounts payable.
9. Paid $4,500 for advertising expense.
10. Paid $7,200 cash for insurance expense.

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


b. Record each event in a horizontal statements model like the following one. The first event is recorded as anexample.


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  • CreatedOctober 26, 2013
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