Question

Bensen Company began operations when it acquired $26,400 cash from the issue of common stock on January 1, 2018. The cash acquired was immediately used to purchase equipment for $26,400 that had a $3,600 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $3,100 cash. Bensen uses straight-line depreciation.

	2018	2019	2020	2021	2022
Revenue	$7,790	$8,290	$8,490	$7,290	$0

Required

Prepare income statements, statements of changes in stockholders’ equity, balance sheets, and statements of cash flows for each of the five years. Present the statements in the form of a vertical statements model. (Statement of Cash Flows and Balance Sheet only: Items to be deducted must be indicated with a minus sign.)

BEN SEN COMPANY For the Year Ended December 31 Income Statement 2018 2019 2020 2021 2022 Gain/(Loss) Net income/loss) Satement of Changes in Stockholders' Equity Net income/(loss) Total stockholder's equity Balance Sheet Assets Total assets Stockholder's Equity

Answer 1

BENSEN COMPANY For the Year Ended December 31 Income Statement 2018 2019 $ 7,790 $ 8,290 $ $ 5,700 $ 5,700 $ 2022 Revenue Depreciation expense 2020 8,490 $ 5,700 $ 2021 7,290 $ 5,700 - Gain (Loss) Net Income/(Loss) $ 2,090 $ 2,590 $ 2,790 $ (500) 1,590 (500) Computation of Depreciation per annuam Original cost of Equipment salvage value Depreciable value Depreciable value=original cost-salvage value Depreciation per annuam Depreceiation per annuam= Depreciable value/useful life 26,400 3,600 22,800 $ 5,700 Loss on sale of equipment Book value of equipment at the beginning of 5th year Less :-Sale proceed of eqipment Loss on sale of equipment $ $ $ 3,600 3,100 500

Satement of Changes in Stockholders Equity 2018 2019 2020 2021 2022 $ 28,490 $ 31,080 $ 33,870 $ 35,460 26400 - Balance on Jan Issue of Common stock Total Net Income/(Loss) 26400 $ 28,490 $ 2,090 $ 2,590 $ 31,080 2,790 $ 33,870 $ 35,460 $ 1,590 (500) $ Total stock holders Equity $ 28,490 $ 31,080 $ 33,870 $ 35,460 $ 34,960 Asset Accumulated Depreciation Net Asset Cash Total Asset Stock Holders Equity Balance Sheet 26400 26400 5700 11400 20700 15000 $ 7,790 $ 16,080 $ $ 28,490 $ 31,080$ 26400 17100 9300 24,570 33,870 26400 22800 - 3600 $ 31,860 $ 34,960 $ 35,460 $ 34,960 $ 28,490 $ 31,080 $ 33,870 $ 35,460 $ 34,960

$ $ Statement of Cash Flows Operating Activities Net Income $ 2,090 $ 2,590 add:depreciation 5700 5700 Net Cash flow from operating activities $ 7,790 $ 8,290 Investing activites Purchase of Equipment -26400- Sale of equipment 2,790 5700 8,490 1,590 5700 7,290 $ $ 3100 -26400 3100 Net cash investing activities Financing activities Issue of common stock 26400 $ Net cash flow from financing activities Net Change in cash Beginning Cash Balance Ending Cash Balance 26400 - 7,790 $ 0 $ 7,790 $ 8,290 $ 8,490 $ 7,290 $ 3,100 7,790 $ 16,080 $ 24,570 $ 31,860 16,080 $ 24,570 $ 31,860 $ 34,960 $