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. Year 1 1. Acquired $59,000 cash from the issue of common stock. 2. Purchased a computer system for $24,400. It has an estimated useful life of five years and a $2,470 salvage value. 3. Paid $1,400 sales tax on the computer system. 4. Collected $31,690 in fees from clients. 5. Paid $1,470 in fees for routine maintenance to service the computers. 6. Recorded double-declining-balance depreciation on the computer system for 1. Year 2 1. Paid $990 for repairs to the computer system. 2. Bought off-site backup services to maintain the computer system, $1,270. 3. Collected $34,690 in fees from clients. 4. Paid $880 in fees to service the computers. 5. Recorded double-declining-balance depreciation for Year 2. Year 3 1. Paid $2,900 to upgrade the computer system, which extended the total life of the system to six years. The salvage value did not change. 1. Paid $2,900 to upgrade the computer system, which extended the total life of the system to six years. The salvage value did not change. 2. Paid $830 in fees to service the computers. 3. Collected $34,370 in fees from clients. 4. Recorded double-declining-balance depreciation for Year 3. Required a. Record the above transactions in a horizontal statements model. b-1. Prepare income statements for Year 1, Year 2, and Year 3. b-2. Prepare statements of changes in stockholders' equity for Year 1, Year 2, and Year 3. b-3. Prepare balance sheets for Year 1, Year 2, and Year 3. b-4. Prepare statements of cash flows for Year 1, Year 2, and Year 3. account balances and cash outflows with a minus sign. Not all cells will require entry.) Record the above transactions in a horizontal statements model for Year 3. (In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA), or 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. Not all cells will require entry.) Prepare income statements for Year 1, Year 2, and Year 3. Prepare statements of changes in stockholders' equity for Year 1 , Year 2, and Year 3. Prepare balance sheets for Year 1 , Year 2 , and Year 3. Prepare statements of cash flows for Year 1, Year 2, and Year 3. (Cash outflows should be indicated with a minus sign.)
