Sweets Bakery makes cakes, pies, and other pastries that it sells to local grocery stores. The company experienced the following transactions during 2018:

1. Started business by acquiring $60,000 cash from the issue of common stock.
2. Purchased bakery equipment for $46,000 with a four-year life and a $6,000 salvage value.
3. Had cash sales in 2014 amounting to $42,000.
4. Paid $8,200 of cash for supplies which were all used during the year to make baked goods.
5. Paid other operating expenses of $12,000 for 2018.

Required

1. Organize the class into two sections and divide each section into groups of three to five students. Assign each section a depreciation method: straight-line or double-declining-balance.

Group Task

Prepare an income statement and a balance sheet using the preceding information and the depreciation method assigned to your group.