Question

1. The company started when it acquired $17.000 cash by issuing common stock 2. Purchased a new cooktop that cost $14,200 cash. 3. Earned $22.500 in cash revenue. 4. Paid $12,300 cash for salaries expense. 5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, 2018, the cooktop has an expected useful life of four years and an estimated salvage value of $2,700. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018 Required a. Record the above transactions in a horizontal statements model like the following one. (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). If the element is not affected by the event, leave the cell blank. Enter any decreases to account balances and cash outflows with a minus sign.) GULF SEAFOOD Horizontal Statements Model Income Statement Equity Statement of Cash Common Retained Revenue - Expense Flows - Net Income Stock Earnings Balance Sheet Assets + Equipment - Accumulated - Depreciation Event Cash 1111111 + 0+ Bal 0 - OP

Answer 1

Requirement a:

	Balance Sheet									Income Statement
	Assets						Equity			Revenues	-	Expenses	=	Net income
Event	Cash	+	Equipment	-	Accumulated Depreciation	=	Common Stock	+	Retained Earnings						Statement of Cash Flows
1	$17,000	+		-		=	$17,000	+			-		=		$17,000	FA
2	($14,200)	+	$14,200	-		=		+							($14,200)	IA
3	$22,500	+		-		=		+	$22,500	$22,500	-		=	$22,500	$22,500	OA
4	($12,300)	+		-		=		+	($12,300)			$12,300		($12,300)	($12,300)	OA
5		+		-	$2,875	=		+	($2,875)		-	$2,875	=	($2,875)
Bal.	$13,000	+	$14,200	-	$2,875	=	$17,000	+	$7,325	$22,500		$15,175		$7,325	$13,000

Requirement b:

Depreciation expense = (Cost - Salvage value) ÷ Useful life

Depreciation expense = (14,200-2,700)/4

Depreciation expense = $2,875

Requirement c:

Accumulated depreciation is $2,875