Bensen Company began operations when it acquired $26,500 cash from the issue of common stock on...

Bensen Company began operations when it acquired $26,500 cash from the issue of common stock on January 1, 2018. The cash acquired was immediately used to purchase equipment for $26,500 that had a $4,500 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $4,000 cash. Bensen uses straight-line depreciation:

	2018	2019	2020	2021	2022
revenue	$8,000	$8,500	$8,700	$7,500	$0

Prepare income statements, statements of changes in stockholders’ equity, balance sheets, and statements of cash flows for each of the five years. Present the statements in the form of a vertical statements model.

Expert Solution

Income Statement
	2018	2019	2020	2021	2022
revenue	$8,000	$8,500	$8,700	$7,500	$0
Less: Depreciation	5500	5500	5500	5500	0
Less: Loss on sale of equipment					500
Net Income	$2,500	$3,000	$3,200	$2,000	($500)

working
Depreciation
(26500-4500)/4	5500

statements of changes in stockholders’ equity
	2018	2019	2020	2021	2022
Beginning bal	26500	$29,000	$32,000	$35,200	$37,200
Add: Net Income	$2,500	$3,000	$3,200	$2,000	($500)
Ending bal	$29,000	$32,000	$35,200	$37,200	$36,700

Balance Sheet
	2018	2019	2020	2021	2022
Assets
Cash	$8,000	$16,500	$25,200	$32,700	$36,700
Equipment	$21,000	$15,500	$10,000	$4,500	$0
Total assets	$29,000	$32,000	$35,200	$37,200	$36,700
Liabilities & stockholder equity
Stockholder equity	$29,000	$32,000	$35,200	$37,200	$36,700

Cash flow statement
Cash flow from operating activities
Revenue	$8,000	$8,500	$8,700	$7,500	$0

Cash flow from investing activities	-26500				4000
Cash flow from financing activities	26500
Net Increase in cash	$8,000	$8,500	$8,700	$7,500	$4,000
Beg bal	0	$8,000	$16,500	$25,200	$32,700
Ending bal	$8,000	$16,500	$25,200	$32,700	$36,700

If any doubt please comment

ekkarill92 answered 1 year ago

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