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

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

2. Purchased a new cooktop that cost $13,800 cash.

3. Earned $20,300 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, 2018, the cooktop has an expected useful life of four years and an estimated salvage value of $2,800. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018.

Required

1. 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 Event Balance Sheet Income Statement Statement of Cash Flows Assets = Equity Revenue – Expense = Net Income Cash + Equipment – Accumulated Depreciation = Common Stock + Retained Earnings 1. + – = + – = 2. + – = + – = 3. + – = + – = 4. + – = + – = 5. + – = + – = Bal. 0 + 0 – 0 = 0 + 0 0 – 0 = 0 0

Answer 1

Answer

GULF SEAFOOD

Horizontal Statements Model

Event

Balance Sheet

Income Statement

Statement of Cash Flows

Assets

=

Equity

Revenue

–

Expense

=

Net Income

Cash

+

Equipment

–

Accumulated Depreciation

=

Common Stock

+

Retained Earnings

1

$20,000

+

–

=

$20,000

+

–

=

$20,000

FA

2

($13,800)

+

$13,800

–

=

+

–

=

($13,800)

IA

3

$20,300

+

–

=

+

$20,300

$20,300

–

=

$20,300

$20,300

OA

4

($12,500)

+

–

=

+

($12,500)

–

$12,500

=

($12,500)

($12,500)

OA

5

+

–

$2,750

=

+

($2,750)

–

$2,750

=

($2,750)

Bal.

$14,000

+

$13,800

–

$2,750

=

$20,000

+

$5,050

$20,300

–

$15,250

=

$5,050

$14,000

NC