Question

Golden Manufacturing Company started operations by acquiring $104,300 cash from the issue of common stock. On January 1, 2016, the company purchased equipment that cost $104,300 cash, had an expected useful life of six years, and had an estimated salvage value of $20,860. Golden Manufacturing earned $93,390 and $64,790 of cash revenue during 2016 and 2017, respectively. Golden Manufacturing uses double-declining-balance depreciation.

Required:

Prepare income statements, balance sheets, and statements of cash flows for 2016 and 2017. Use a vertical statements format. (Hint: Record the events in T-accounts prior to preparing the statements.) (Do not round intermediate calculations. Round your final answers to the nearest whole dollar. Amounts to be deducted and net loss should be indicated with a minus sign.)

	GOLDEN MANUFACTURING COMPANY Financial Statements 2016 2017 Income statements Balance sheets Assets Total assets Stockholders’ equity Total stockholders’ equity Statements of cash flows Cash flows from operating activities: Cash flows from investing activities: Cash flows from financing activities: Net change in cash Ending cash balance

Answer 1

Depreciation under DDB Method
Year - a	Net Book value, beginning of year - b	Double declained depreciation - (c = b/Life of assets*2	Net book value, End of the year - d = b-c
2016	104,300	34,767	69,533
2017	69,533	23,178	46,356

Golden Manufacturing Company
Financial Statements
	2016	2017
Income Statement
Cash revenue	$      93,390	$    64,790
Less: Depreciation	$      34,767	$    23,178
Net income	$      58,623	$    41,612
Balance Sheet
Assets
Cash	$      93,390	$ 158,180
Equipment	$   104,300	$ 104,300
Less: Accumulated depreciation - Equipment	$   (34,767)	$ (57,944)
Equipment - Net	$      69,533	$    46,356
Total Assets	$   162,923	$ 204,536
Stockholders' Equity
Common stock	$   104,300	$ 104,300
Retained earnings	$                 -	$    58,623
Net income	$      58,623	$    41,612
Total Stockholders' equity	$   162,923	$ 204,536
Statement of Cash flows
Cash flow from operating activities
Net cash provided by operating activities	$      93,390	$    64,790
Cash flow from investing activities
Net cash used for investing activities	$ (104,300)	$               -
Cash flow from financing activities
Net cash provided by financing activities	$   104,300	$               -
Net change in cash	$      93,390	$    64,790
Add: beginning cash balance	$                 -	$    93,390
Ending cash balance	$      93,390	$ 158,180

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