Question

- yucul Urspidyeu Delow.) The following events apply to Gulf Seafood for the Year 1 fiscal year: 1. The company started when it acquired $18,000 cash by issuing common stock. 2. Purchased a new cooktop that cost $13,300 cash. 3. Earned $23,200 in cash revenue. 4. Paid $12,500 cash for salaries expense. 5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, Year 1, the cooktop has an expected useful life of four years and an estimated salvage value of $2,300. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1.

Answer 1

Solution a:

Gulf Sea food
Horizontal Statement Model
Event	Balance Sheet													Income Statement					Statement of Cash Flows
	Assets					=	Liabilities			+	Stockholder's Equity			Revenue	-	Expense	=	Net Income
	Cash	+	Equipment	-	Accumulateed Depreciation	=	Notes Payable	+	Interest Payable	+	Common Stock	+	Retained Earnings
1	$18,000.00	+		-		=		+		+	$18,000.00	+			-		=		$18,000.00	FA
2	-$13,300.00	+	$13,300.00	-		=		+		+		+			-		=		-$13,300.00	IA
3	$23,200.00	+		-		=		+		+		+	$23,200.00	$23,200.00	-		=	$23,200.00	$23,200.00	OA
4	-$12,500.00	+		-		=		+		+		+	-$12,500.00		-	$12,500.00	=	-$12,500.00	-$12,500.00	OA
5		+		-	$2,750.00	=		+		+		+	-$2,750.00		-	$2,750.00	=	-$2,750.00		NA
Total	$15,400.00	+	$13,300.00	-	$2,750.00	=		+		+	$18,000.00	+	$7,950.00	$23,200.00	-	$15,250.00	=	$7,950.00	$15,400.00	NC

Solution b:

Depreciation expense for year 1 = (Cost - Salvage value) / Useful life = ($13,300 - $2,300) / 4 = $2,750

Solution c:

Accumulated depreciation on Dec 31, Year 2 = $2,750*2 = $5,500