Question

! Required information Exercise 6-7 Effect of depreciation on the accounting equation and financial statements LO 6-2 The following information applies to the questions displayed below The following events apply to Gulf Seafood for the 2018 fiscal year 1. The company started when it acquired $16,000 cash by Issuing common stock 2. Purchased a new cooktop that cost $14,100 cash 3. Earned $23,100 in cash revenue. 4. Paid $11,800 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 $2,100. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018. Exercise 6-7 Part c c. What amount of accumulated depreciation would Gulf Seafood report on the December 31, 2019, balance sheet? Accumulated depreciation

Answer 1

Annual depreciation = (Cost price - Salvage value)/Useful life

= (14,100 - 2,100)/4

= 12,000/4

= $3,000

Accumulated depreciation in year 2018 and 2019 = 3,000 + 3,000

= $6,000

Hence, Gulf seafood would report accumulated depreciation of $6,000 on December 31, 2019 Balance Sheet.

kindly give a positive rating if you are satisfied with the solution. do comment if you have any query, Thanks.