Golden Manufacturing Company started operations by acquiring $109,000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $99,000 cash, had an expected useful life of five years, and had an estimated salvage value of $9,900. Golden Manufacturing earned $95,450 and $66,660 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation. Required a. Record the transactions in a horizontal statements model. b-1. Prepare income statements for Year 1 and Year 2. b-2. Prepare balance sheets for Year 1 and Year 2. b-3. Prepare statements of cash flows for Year 1 and Year 2.
Golden Manufacturing Company started operations by acquiring $109,000 cash from the issue of common stock. On January 1, Year 1, the company purchased equipment that cost $99,000 cash, had an expected useful life of five years, and had an estimated salvage value of $9,900. Golden Manufacturing earned $95,450 and $66,660 of cash revenue during Year 1 and Year 2, respectively. Golden Manufacturing uses double-declining-balance depreciation. Required a. Record the transactions in a horizontal statements model. b-1. Prepare income statements for Year 1 and Year 2. b-2. Prepare balance sheets for Year 1 and Year 2. b-3. Prepare statements of cash flows for Year 1 and Year 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:Golden Manufacturing Company started operations by acquiring $109,000 cash from the issue of common stock. On January 1, Year 1,
the company purchased equipment that cost $99,000 cash, had an expected useful life of five years, and had an estimated salvage
value of $9,900. Golden Manufacturing earned $95,450 and $66,660 of cash revenue during Year 1 and Year 2, respectively. Golden
Manufacturing uses double-declining-balance depreciation.
Required
a. Record the transactions in a horizontal statements model.
b-1. Prepare income statements for Year 1 and Year 2.
b-2. Prepare balance sheets for Year 1 and Year 2.
b-3. Prepare statements of cash flows for Year 1 and Year 2.
Complete this question by entering your answers in the tabs below.
Req A
Req B1 Inc
Stmt
Req B2 Bal
Sheet
Req B3 Stmt
Cash Flows
Record the transactions in a horizontal statements model. (In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, FA for financing
activity, and NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input. Do not round intermediate calculations.
Round your final answers to the nearest whole dollar.)
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Transcribed Image Text:Prepare income statements for Year 1 and Year 2. (Do not round intermediate calculations. Round the final answers to nearest
dollar amount.)
GOLDEN MANUFACTURING COMPANY
Income Statements
Year 1
Year 2
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