The following events apply to Gulf Seafood for the Year 1 fiscal year: 1. The company started

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The following events apply to Gulf Seafood for the Year 1 fiscal year:
1. The company started when it acquired $60,000 cash by issuing common stock.
2. Purchased a new cooktop that cost $40,000 cash.
3. Earned $72,000 in cash revenue.
4. Paid $25,000 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 $4,000. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1.


Required
a. Record the previous transactions in a horizontal statements model like the following one.

Balance Sheet Statement of Cash Income Statement Stk. Equity Assets Flows Event Cash + Book Value of Equip. = Exp. Com.


b. What amount of depreciation expense would Gulf Seafood report on the Year 1 income statement?
c. What amount of accumulated depreciation would Gulf Seafood report on the December 31, Year 2, balance sheet?
d. Would the cash flow from operating activities be affected by depreciation in Year 1?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Related Book For  book-img-for-question

Introductory Financial Accounting for Business

ISBN: 978-1260299441

1st edition

Authors: Thomas Edmonds, Christopher Edmonds

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