MBA560 Financial and Managerial Accounting: Module 3 P6-24 Optimal Solutions Inc

Reminder: Please make sure to reword or paraphrase written essay answers; do not submit our tutorial as your own work. MBA560 Financial and Managerial Accounting Module 3 Homework Problem 6-24 Purchase and use of tangible asset: three accounting cycles, double- declining- balance depreciation The following transactions pertain to Optimal Solutions Inc. Assume the transactions for the purchase of the computer and any capital improvements occur on January 1 each year. 2012 1. Acquired $60,000 cash from the issue of common stock. 2. Purchased a computer system for $25,000 cash. It has an estimated useful life of five years and a $3,000 salvage value. 3. Paid $1,500 sales tax on the computer system. 4. Collected $35,000 in data entry fees from clients. 5. Paid $1,200 in fees to service the computers. 6. Recorded double-declining-balance depreciation on the computer system for 2012. 7. Closed the revenue and expense accounts to Retained Earnings at the end of 2012. 2013 1. Paid $800 for repairs to the computer system. 2. Bought a case of toner cartridges for the printers that are part of the computer system, $1,200. 3. Collected $38,000 in data entry fees from clients. 4. Paid $900 in fees to service the computers. 5. Recorded double-declining balance depreciation for 2013. 6. Closed the revenue and expense accounts to Retained Earnings at the end of 2013. 2014 1. Paid $3,000 to upgrade the computer system, which extended the total life of the system to six years. 2. Paid $900 in fees to service the computers. 3. Collected $35,000 in data entry fees from clients. 4. Recorded double-declining balance depreciation for 2014. 5. Closed the revenue and expense accounts to Retained Earnings at the end of 2014. Required a. Use a horizontal statements model like the following one to show the effect of these transactions on the elements of financial statements. b. Use a vertical model to present financial statements for 2012, 2013 and 2014.
sellfy