Required information [The following information applies to the questions displayed below.] The following transactions pertain to Accounting Solutions Inc. Assume the transactions for the purchase of the computer and any capital improvements occur on January 1 each year. 2018 1. Acquired $61,000 cash from the issue of common stock. 2. Purchased a computer system for $26,900. It has an estimated useful life of five years and a $2,650 salvage value. 3. Paid $1,300 sales tax on the computer system. 4. Collected $36,140 in fees from clients. 5. Paid $1,440 in fees for routine maintenance to service the computers. 6. Recorded double-declining-balance depreciation on the computer system for 2018. 2019 1. Paid $980 for repairs to the computer system. 2. Bought off-site backup services to maintain the computer system, $1,470. 3. Collected $39,140 in fees from clients. 4. Paid $940 in fees to service the computers. 5. Recorded double-declining-balance depreciation for 2019. 2020 1. Paid $2,800 to upgrade the computer system, which extended the total life of the system to six years. The salvage value did not change. 2. Paid $970 in fees to service the computers. 3. Collected $38,220 in fees from clients. 4. Recorded double-declining-balance depreciation for 2020. Required a. Record the above transactions in a horizontal statements model like the following one. (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). If an element is not affected by the event, leave the cell blank. Enter any decreases to account balances and cash outflows with a minus sign.) ACCOUNTING SOLUTIONS INC. Horizontal Statements Model - 2018 Balance Sheet Income Statement Assets Stockholders' Equity Event 2018 Statement of Cash Flow Revenue Expense = Net Income Cash + Equipment Accumulated Depreciation Common Stock Retained Earnings 1. + 2. + 61,000 + (26,900)| + (1,300) + 36,140] + (1,440) + 26,900 1,300 3. 4. + 5. + 6. + Bal. 67,500 + 28,200 0 = 01 + 0 0 0 = 0 0 ACCOUNTING SOLUTIONS INC. Horizontal Statements Model - 2019 Balance Sheet Income Statement Event Assets 2019 Stockholders' Equity Common Retained Stock Earnings Statement of Cash Flow Revenue Expense = Net Income Cash Accumulated Depreciation + Equipment Bal 1. + 2. + 3. + + = 4 + + + 5. Bal. 0 + 0 0 = 0 + 0 0- 0 = 0 01 ACCOUNTING SOLUTIONS INC. Horizontal Statements Model - 2020 Balance Sheet Income Statement Event Assets Stockholders' Equity 2020 Statement of Cash Flow Revenue Expense = Net Income Cash + Equipment Accumulated Depreciation Common Stock Retained Earnings Bal. 1. + + 2. + + 3. + + 4. + = + Bal. 0 + 0 0 01 + 0 0 0 0 0
