Exercise 8-8A Effect of double-declining-balance depreciation on financial statements LO 8-3 Golden Manufacturing Company started operations by acquiring $145,000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $135,000 cash, had an expected useful life of five years, and had an estimated salvage value of $13,500. Golden Manufacturing earned $87,670 and $65,890 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. Complete this question by entering your answers in the tabs below. Req A Req B1 Inc Stmt Req B2 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 activit 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. N Flow" column may require an input - leave cells blank if there is no corresponding input needed.) Flow" column may require an input - leave cells blank if there is no corresponding input needed.) GOLDEN MANUFACTURING COMPANY Horizontal Statements Model Balance Sheet Equity Accumulated Common Retained Revenue Depreciation Stock Earnings Assets Income Statement Statement of Cash Expense Net Income Flows Event Cash + Equipment + + + Year 1 Issue stock Purchase equipment Revenue Depreciation expense Balance Year 2 Beg. bal. Revenue Depreciation expense End. bal. + Complete this question by entering your answers in the tabs below. Req A Req B1 Inc Req B2 Bal Req B3 Stmt Stmt Sheet Cash Prepare income statements for Year 1 and Year 2. (Do not round intermediate calculations. Round the final answers to nearest dollar amount.) GOLDEN MANUFACTURING COMPANY Income Statements Year 1 Year 2 Complete this question by entering your answers in the tabs below. Req A Req B1 Inc Req B2 Bal Req B3 Stmt Stmt Sheet 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 Total Assets Stockholders' equity Total stockholders' equity Complete this question by entering your answers in the tabs below. Req A Req B1 Inc Stmt Req B2 Bal Sheet Req B3 Stmt Cash Prepare statements of cash flows for Year 1 and Year 2. (Amounts to be deducted should be indicated with minus sign. Do no 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
