Problem $6-3$

$15$ points

Major Inc. began operations when it acquired

$$450,000$ cash from the issue of common stock

on January $1,2020.$ The cash acquired was immediately used to purchase equipment for

$$450,000$

that had a

$$90,000$

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

$$45,000$

cash.

Major Inc. uses straight$-$line depreciation. Assume depreciation is the only expense to record.

REQUIRED

Prepare income statements, balance sheets, and statements of cash flows for each of the five years.

Students may want to utilize a horizontal model for each year to organize transactions and verify numbers for financial statements