Miller Company started operations by acquiring $200,000 cash from the issue of common stock. The company purchased

Question:

Miller Company started operations by acquiring $200,000 cash from the issue of common stock. The company purchased equipment that cost $200,000 cash on January 1, 2010. The equipment had an expected useful life of five years and an estimated salvage value of $20,000. Miller Company earned $92,000 and $76,000 of cash revenue during 2010 and 2011, respectively. Miller Company uses double-declining-balance depreciation.

Required

a. Record the above transactions in a horizontal statements model like the following one.

Miller Company started operations by acquiring $200,000 cash fro

b. Prepare income statements, balance sheets, and statements of cash flows for 2010 and 2011. Use a vertical statementsformat.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...