Question

At the beginning of Year 1. Copeland Drugstore purchased a new computer system for $225,000. It is expected to have a five-year life and a $35,000 salvage value Exercise 8-9A Part b b. Record the purchase of the computer system and the depreciation expense for the first year under straight line and double declining-balance methods in a financial statements model in the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA) and net change in cash (NC). Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the Statement of Cash Flows" column may require an input leave cells blank if there is no corresponding input needed.) Balance Sheet COPELAND DRUGSTORE Horizontal Statements Model Income Statement Stockholders' Louity - Revenue Expenses Retained Earnings Assets Statement of Cash Cash Book Value of Computer Straight-Line Depreciation

Answer 1

Copeland Drugstore Horizontal Statement Model Balance sheet Assets Stockholders Equity Cash + Book value of Computer = Retained Earnings -225000 + 225000 Straightline Depreciation - 38000 Double Declining -90000 Income Statement Statement of Cashflow Revenue - Expense = Net Income -225000 IA 38000 -90000 Straightline Depreciation ( 225000 - 35000)/5 = 38000 Double Declining = 2 x 225000 x 1/5