Question

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The following events apply to Gulf Seafood for the 2018 fiscal year:

The company started when it acquired $20,000 cash by issuing common stock.

Purchased a new cooktop that cost $15,300 cash.

Earned $22,000 in cash revenue. Paid $11,200 cash for salaries expense.

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 $2,200. Use straight-line depreciation.

The adjusting entry was made as of December 31, 2018. What amount of accumulated depreciation would Gulf Seafood report on the December 31, 2019, balance sheet?

Accumulated depreciation=.....?

Answer 1

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Depreciation Expense for 2018 ($15,300-$2,200)/4 Years = $3,275

Depreciation Expense for 2019 ($15,300-$2,200)/4 Years = $3,275

Total Accumulated Depreciation on Dec 31, 2019= $3,275+$3,275=$6,550