Question

The following transactions pertain to Accounting Solutions Inc. Assume the transactions for the purchase of the computer and any capital improvements occur on January 1 each year. Year 1 Acquired $70,000 cash from the issue of common stock. Purchased a computer system for $22,800. It has an estimated useful life of five years and a $2,520 salvage value. Paid $1,900 sales tax on the computer system. Collected $34,590 in fees from clients. Paid $1,050 in fees for routine maintenance to service the computers. Recorded double-declining-balance depreciation on the computer system for Year 1. Year 2 Paid $960 for repairs to the computer system. Bought off-site backup services to maintain the computer system, $1,160. Collected $37,590 in fees from clients. Paid $910 in fees to service the computers. Recorded double-declining-balance depreciation for Year 2. Year 3 Paid $2,700 to upgrade the computer system, which extended the total life of the system to six years. The salvage value did not change. Paid $830 in fees to service the computers. Collected $37,890 in fees from clients. Recorded double-declining-balance depreciation for Year 3. Required a. Record the above transactions in a horizontal statements model. b-1. Prepare income statements for Year 1, Year 2, and Year 3. b-2. Prepare statements of changes in stockholders' equity for Year 1, Year 2, and Year 3. b-3. Prepare balance sheets for Year 1, Year 2, and Year 3. b-4. Prepare statements of cash flows for Year 1, Year 2, and Year 3.

Answer 1