es The following transactions pertain to Accounting Solutions Incorporated Assume the transactions for the purchase of the computer and any capital improvements occur on January 1 each year. Year 1 1. Acquired $80,000 cash from the issue of common stock. 2. Purchased a computer system for $35,000. It has an estimated useful life of five years and a $5,000 salvage value. 3. Paid $2,450 sales tax on the computer system. 4. Collected $65,000 in fees from clients. 5. Paid $1,500 in fees for routine maintenance to service the computers. 6. Recorded double-declining-balance depreciation on the computer system for Year 1. Year 2 1. Paid $1,000 for repairs to the computer system. 2. Bought off-site backup services to maintain the computer system, $1,500. 3. Collected $68,000 in fees from clients. 4. Paid $1,500 in fees to service the computers. 5. Recorded double-declining-balance depreciation for Year 2. Year 3 4

1. Paid $6,000 to upgrade the computer system, which extended the total life of the system to six years. The salvage value did not change. 2. Paid $1,200 in fees to service the computers. 3. Collected $70,000 in fees from clients. 4. Recorded double-declining-balance depreciation for Year 3. Required a. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), investing activities (IA), or financing activities (FA). 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. Complete this question by entering your answers in the tabs below. Complete this question by entering your answers in the tabs below. Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of ca amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA) activities (FA). Note: Enter any decreases to account balances or cash outflows with a minus sign. Leave cells blank if no input is needed