Naoki Manufacturing experienced the following events during its first accounting

Question

Naoki 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 6. Paid cash to purchase raw materials that were used to make products 7. Paid wages to production workers. 8. Paid salaries to administrative staf issuing common stock. Required Use the following horizontal financial statements model to show how each event affects the balance sheet, income statement, and the 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 an operating activities (OA), an investing activities (IA), or a financing activities (FA). The letters NA indicate that an element is not affected by the event. The first transaction has been recorded as an example. (Note: Show accumulated depreciation as a decrease in the book value of the appropriate asset account.) Assets - Stockholders' Equity Income Statement Event Manufacturing Equipment Retained Revenue Expense Earnings Statement of Cash Flow Office Net Income No. Cash+Inventory 1 NA 2 Capital Furniture Contribu +NA +NA NA -NA | NA NA 4 6

Explanation / Answer

Answer 1. Asset = Stockholders' Equity Income Statement Statement of Cash Flow Cash + Inventory + Manufacturing Equipment + Office Furniture = Common Stock + Retained Earnings Revenue - Expenses = Net Income 1 NA I D NA NA NA NA NA NA NA 2 NA NA NA D NA D NA I D NA 3 I NA NA NA NA I I NA I I OA 4 NA D NA NA NA D NA D D NA 5 I NA NA NA I NA NA NA NA I FA 6 D I NA NA NA NA NA NA NA D OA 7 D I NA NA NA NA NA NA NA D OA 8 D NA NA NA NA D NA I D D OA

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