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Golden Manufacturing Company started operations by acquiring $146,000 cash from the issue of common stock. On January 1 , Year 1 , he company purchased
Golden Manufacturing Company started operations by acquiring $146,000 cash from the issue of common stock. On January 1 , Year 1 , he company purchased equipment that cost $136,000 cash, had an expected useful life of five years, and had an estimated salvage ralue of $13,600. Golden Manufacturing earned $86,670 and $68,660 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation. Required a. Record the above transactions in a horizontal statements 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. Prepare income statements, balance sheets, and statements of cash flows for Year 1 and Year 2. Use a vertical statements format. GOLDEN MANUFACTURING COMPANY Statements of Cash Flows For the Year Ended December 31 \begin{tabular}{|l|l|l|} \hline Cash flows from operating activities: \\ \hline Inflow from customers \\ \hline Cash flows from investing activities: \\ \hline Outflow to purchase equipment & \\ \hline Cash flows from financing activities: & & \\ \hline Inflow from stock issue & & \\ \hline Net change in cash & & \\ \hline Plus: Beginning cash balance & $ & \\ \hline Ending cash balance & 0 & \\ \hline \end{tabular} GOLDEN MANUFACTURING COMPANY Income Statements For the Year Ended December 31 \begin{tabular}{|l|l|l|} \hline & Year 1 & Year 2 \\ \hline Accounts payable & & \\ \hline & & \\ \hline Net income & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{15}{|c|}{ GOLDEN MANUFACTURING COMPANY } \\ \hline \multicolumn{15}{|c|}{ Horizontal Statements Model } \\ \hline \multirow[b]{3}{*}{ Event } & \multicolumn{7}{|c|}{ Balance Sheet } & \multicolumn{5}{|c|}{ Income Statement } & \multirow{3}{*}{\multicolumn{2}{|c|}{\begin{tabular}{c} Statement of Cash \\ Flows \end{tabular}}} \\ \hline & \multicolumn{3}{|c|}{ Assets } & \multirow{2}{*}{\begin{tabular}{l} = \\ = \end{tabular}} & \multicolumn{3}{|c|}{ Stockholders' Equity } & \multirow{2}{*}{\multicolumn{2}{|c|}{ Revenue }} & \multirow[b]{2}{*}{ Expense } & \multirow[b]{2}{*}{=} & \multirow[b]{2}{*}{ Net Income } & & \\ \hline & Cash & + & \begin{tabular}{c} Book Value of \\ Equipment \end{tabular} & & \begin{tabular}{l} Common \\ Stock \end{tabular} & + & \begin{tabular}{l} Retained \\ Earnings \end{tabular} & & & & & & & \\ \hline \multicolumn{15}{|l|}{ Year 1} \\ \hline Issue stock & & + & 0 & = & & + & 0 & 0 & - & 0 & = & 0 & & \\ \hline Purchase equipment & & + & & = & 0 & + & 0 & 0 & - & 0 & = & 0 & & r \\ \hline Revenue & & + & 0 & = & 0 & + & & & - & 0 & = & & & \\ \hline Depreciation expense & 0 & + & & = & 0 & + & & 0 & - & & = & & 0 & \\ \hline Balance & 0 & + & 0 & = & 0 & + & 0 & 0 & - & 0 & = & 0 & 0 & NC \\ \hline \multicolumn{15}{|l|}{ Year 2} \\ \hline Beg. bal. & & + & & = & & + & & 0 & - & 0 & = & 0 & 0 & \\ \hline Revenue & & + & 0 & = & 0 & + & & & - & 0 & = & & & \\ \hline Depreciation expense & 0 & + & & = & 0 & + & & 0 & - & & = & & 0 & \\ \hline Ending balance & 0 & + & 0 & = & 0 & + & 0 & 0 & - & 0 & = & 0 & 0 & NC \\ \hline \end{tabular}
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