Exercise 1041 Identifying the effect of product versus selling, general, and administrative cost on the income statement L0 102 Each ofthe following events describes acquinng an asset that requires a yearend adjusting entry. 1. Paid $11,900 cash on January 1 to purchase computer equipment to be used for administrative
purposes. The equipment had an estimated expected use‘lul life of four years and a $2,300 salvage
value. Paid $11,900 cash on January 1 to purchase manufacturing equipment. The equipment had an
estimated expected useful life of four years and a $2,300 salvage value. Paid $16,800 cash in advance on May 1 fora one—year rental contract on administrative otfices. Paid $16,800 cash in advance on May 1 fora one—year rental contract on manufacturing facilities. Paid $1 ,400 cash to purchase supplies to be used by the marketing department At the end of the year.
$370 of supplies was still on hand. Paid $1 ,400 cash to purchase supplies to be used in the manufacturing process At the end of the year,
$370 of supplies was still on hand. 99‘9“?!) Required Show how the adjusting entry afiects the amount of net inmme shown on the year-end financial statements.
Assume a December 31 annual closing data. Also, in the Cash Flow column. indicate whether the cash flow
is for operating activities {0A}, investing activities (IA), or financing activities (FA). Use NAto indicate that
an element was not afiected by the event and enter '0' in the cell. The first event has been recorded as an
example. Assume that any products that have been made have not been sold. Wastngsnag —_
—_ 2. Adjusting entry 3. Adjusting entry
4. Adjusting entry
5. Adjusting entry
6. Adjusting entry

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