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.

2007

1. Acquired \($60,000\) cash from the issue of common stock.
2. Purchased a computer system for \($25,000\). 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 2007.

2008

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 2008.

2009

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 2009.

Required:

a. Record the above transactions in a horizontal statements model like the following one.

b. Use a vertical model to present financial statements for 2007, 2008, and 2009.

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Assets Balance Sheet Income Statement Statemt. of Equity Rev. - Exp. = Net Inc. Cash Flows Event Com. Ret. Cash + Equip. - A. Depr. = + Stock Earn.