Question: The following transactions pertain to Engineering Solutions Inc Assume the

The following transactions pertain to Engineering Solutions Inc. Assume the transactions for the purchase of the computer and any capital improvements occur on January 1 each year.
2013
1. Acquired $80,000 cash from the issue of common stock.
2. Purchased a computer system for $35,000. It has an estimated useful life of five years and a $5,000 salvage value.
3. Paid $2,450 sales tax on the computer system.
4. Collected $65,000 in fees from clients.
5. Paid $1,500 in fees to service the computers.
6. Recorded double-declining-balance depreciation on the computer system for 2013.
7. Closed the revenue and expense accounts to Retained Earnings at the end of 2013.
2014
1. Paid $1,000 for repairs to the computer system.
2. Bought off-site backup services to maintain the computer system, $1,500.
3. Collected $68,000 in fees from clients.
4. Paid $1,500 in fees to service the computers.
5. Recorded double-declining-balance depreciation for 2014.
6. Closed the revenue and expense accounts to Retained Earnings at the end of 2014.
2015
1. Paid $6,000 to upgrade the computer system, which extended the total life of the system to six years. The salvage value did not change.
2. Paid $1,200 in fees to service the computers.
3. Collected $70,000 in fees from clients.
4. Recorded double-declining-balance depreciation for 2015.
5. Closed the revenue and expense accounts at the end of 2015.

Required
a. Use a horizontal statements model like the following one to show the effect of these transactions on the elements of financial statements. Use + for increase, – for decrease, and NA for not affected. The first event is recorded as an example.


b. For each year, record the transactions in general journal form and post them to T-accounts.
c. Use a vertical model to present financial statements for 2013, 2014, and2015.
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  • CreatedOctober 26, 2013
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