Need to properly put in the formulas in the spreadsheet.
E formu o con manus Income Statement Mowing revenue Operating expenses Income before depre Depreciation expen: Operating income Gain (loss) on sale of Income before taxes Year 1 90,000 45,000 45,000 1,600 43,400 Year 2 100,000 50,000 50,000 1,600 48,400 200 total pe Total 190,000 95,000 95,000 3,200 91,800 200 92,000 27,600 64,400 Savage Years 48,600 13 Income tax expense Net income 43,400 12,020 20,380 14 14,580 34,020 Reporting of Equipment 16 17 18 Year Yoar 2 Balance Sheet - Asset Equipment Accumulated deprec Book value 10,000 1,600 8,400 10,000 3,200 6,800 Reporting of Cash Flows 23 tatement of Cash Flow Year 1 Year 2 Total -10,000 Investing Activities Purchase equipment Sell equipment Operating Activities Income taxes paid - 10,000 7,000 7,000 -13,020 -14,580 -27,600 Problem Spreadsheet Assignment Reporting to the IRS versus financial statement reporting Crist Company operates a lawn mowing service. Crist has chosen to depreciate its equipment for financial statement purposes using the straight-line method. However, to save cash in the short run, Crist has elected to use the MACRS method for income tax reporting purposes. Required a. Set up the following spreadsheet to reflect the two different methods of reporting. Notice that the first two years of revenues and operating expenses are provided. b. Enter the effects of the following items for 2013. (1) At the beginning of 2013, Crist purchased for $10,000 cash a lawn mower it expects to use for five years. Salvage value is estimated to be $2,000. As stated, Crist uses the straight-line method of depreciation for financial statement purposes and the MACRS method for income tax purposes. Use formulas to calculate depreciation expense for each method. (2) No equipment was sold during 2013; therefore, no gain or loss would be reported this year. (3) The income tax rate is 30 percent. For simplicity, assume that the income tax payable was paid in 2013 (4) Complete the schedules for income reporting, reporting of equipment, and reporting of cash flows for 2013. Use formulas for all calculations. c. Enter the effects of the following items for 2014. (1) Crist used the mower for the entire 2014 year. Enter 2014 depreciation expense amounts for the income reporting section of your spreadsheet. (2) At December 31, Crist sold the lawn mower for $7,000. Calculate the gain or loss on the sale for the income reporting section. Use formulas to make the calculations, (3) The income tax rate is 30 percent. For simplicity, assume that the income tax payable was paid in 2014. (4) Complete the schedules for income reporting and reporting of cash flows for 2014 d. Calculate the Total columns for the income reporting and reporting of cash flows sections
