Smith Company started operations by acquiring \(\$ 100,000\) cash from the issue of common stock. On January 1, 2011, the company purchased equipment that cost \(\$ 100,000\) cash. The equipment had an expected useful life of five years and an estimated salvage value of \(\$ 20,000\). Smith Company earned \(\$ 92,000\) and \(\$ 65,000\) of cash revenue during 2011 and 2012, respectively. Smith Company uses double-declining-balance depreciation.
Required
Prepare income statements, balance sheets, and statements of cash flows for 2011 and 2012. Use a vertical statements format. (Hint: Record the events in T-accounts prior to preparing the statements.)