Exercise 8-8A Effect of double-declining balance depreciation on financial statements LO 8-3 Golden Manufacturing Company started operations by acquiring $95.000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $85,000 cash, had an expected useful life of five years, and had an estimated salvage value of $8.500. Golden Manufacturing earned $88,210 and $66,780 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation Required a. Record the purchase in a horizontal statements model b-1. Prepare income statements for Year 1 and Year 2. b-2. Prepare balance sheets for Year 1 and Year 2. b-3. Prepare statements of cash flows for Year 1 and Year 2 Answer is not complete. Complete this question by entering your answers in the tabs below. Reg A Req B1 Inc Stmt Reg 52 Bal Sheet Req B3 Stmt Cash Record the purchase in a horizontal statements model. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA) and net change in cash (NC). Enter any decreases to account balances and cash outflows with a minus sign. Do not round intermediate calculations. Round the final answers to nearest dollar amount. Not all cells in the "Cash Flow column may require an input - leave cells blank if there is no corresponding input needed.) Show less GOLDEN MANUFACTURING COMPANY Horizontal Statements Model Balance Sheet Equity Accumulated Common Retained Depreciation Stock Earnings Income Statement Assets Statement of Cash Flows Event Revenue Expense Net Income Cash Equipment 95,000+ 95,000+ (85,000) ) + 85,000 + = (85,000) IA 88,210 OA + + + 88.210 Year 1 Issue stock Purchase equipment Revenue Depreciation expense Balance Year 2 Bog. bal. Revenue Depreciation expense End. bal. 88,210 (34,000) X + 64,210 + 34.000 34,000 88 210 (34000) 54 210 88,210 (34,000) 54,210 + 85,000 95,000 + 88,210 = 3,210 + 85,000 34.000 95,000+ 0 98,210 66,780 + + + 66.780 66,780 OA 54210 66,780 (20.400) 100.590 + = (20,400) + 144,590 20,400 54.400 68,780 (20,400) ) 46,380 + 85,000 = 95,000 + 66.780 0 = 68,780 . Rega Req B1 Inc Stmt > Req A Req B1 Inc Stmt Req B2 Bal Sheet Req B3 Stmt Cash Prepare balance sheets for Year 1 and Year 2. (Do not round intermediate calculations. Round the final answers to nearest dollar amount.) GOLDEN MANUFACTURING COMPANY Balance Sheets Year 1 Year 2 Assets Cash Equipment Less: Accumulated depreciation $ 98,210 $ 66,780 X 85,000 85,000 (34,000) (20,400) X $ $ 149,210 131,380 Total Assets Stockholders' equity Common stock $ 95,000 54,210 $ 95,000 46,380 X Retained earnings Total stockholders' equity $ 149,210 $ 141,380 Req B1 Inc Req A Req B2 Bal Sheet Req B3 Stmt Cash Stmt Prepare statements of cash flows for Year 1 and Year 2. (Amounts to be deducted should be indicated with minus sign. Do not round intermediate calculations. Round the final answers to nearest dollar amount.) GOLDEN MANUFACTURING COMPANY Statements of Cash Flows Year 1 Year 2 Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Net change in cash Ending cash balance $ 0 $ 0