Question

Bensen Company started business by acquiring $27,500 cash from the issue of common stock on January 1, Year 1. The cash acquired was immediately used to purchase equipment for $27,500 that had a $4,300 salvage value and an expected useful life of four years. The equipment was used to produce the following revenue stream (assume that all revenue transactions are for cash). At the beginning of the fifth year, the equipment was sold for $4,850 cash. Bensen uses straight-line depreciation.

	Year 1			Year 2			Year 3			Year 4			Year 5
Revenue	$	7,540		$	8,040		$	8,240		$	7,040		$	0

Required
Prepare income statements, statements of changes in stockholders’ equity, balance sheets, and statements of cash flows for each of the five years.

Prepare income statements for each of the five years.

BENSEN COMPANY
Income Statement
For the Year Ended December 31
	Year 1	Year 2	Year 3	Year 4	Year 5
Revenue
Depreciation expense
	0	0	0	0	0
Gain/(Loss)
Net income/(loss)	$0	$0	$0	$0	$0

• Prepare the statements of changes in stockholders' equity for each of the five years.

  BENSEN COMPANY
  Statement of Changes in Stockholders’ Equity
  For the Year Ended December 31
  	Year 1	Year 2	Year 3	Year 4	Year 5
  	0	0	0	0	0
  Net income/(loss)
  	0	0	0	0	0
  Total stockholders’ equity	$0	$0	$0	$0	$0

• Prepare the balance sheets for each of the five years. (Amounts to be deducted should be indicated by a minus sign.)

  BENSEN COMPANY
  Balance Sheet
  	Year 1	Year 2	Year 3	Year 4	Year 5
  Assets
  Total assets	$0	$0	$0	$0	$0
  Stockholders’ Equity
  Total stockholders' equity	$0	$0	$0	$0	$0

• Prepare the statements of cash flows for each of the five years.

  BENSEN COMPANY
  Statement of Cash Flows
  	Year 1	Year 2	Year 3	Year 4	Year 5
  Operating activities:
  Net cash flow from operating activities	0	0	0	0	0
  Investing activities:
  Net cash investing activities	0	0	0	0	0
  Financing activities:
  Net cash flow from financing activities	0	0	0	0	0
  Net change in cash	0	0	0	0	0
  Ending cash balance	$0	$0	$0	$0	$0

Answer 1

The answer has been presented in the supporting sheets. All the parts has been solved with detailed explanation and format. Income statement, statement of equity ,balance sheet and cash flow statement has been prepared. For detailed answers refer to the supporting sheets.