2 1666 Required information Exercise 8-7A Effect of depreciation on the accounting equation and financial statements LO 8-2 The following information applies to the questions of played below) The following events apply to Guit Seafood for the Year 1 fiscal year 1. The company started when it acquired $18,000 cash by Istuing common stock 2. Purchased a new cooktop that cost $12.100 cash 3. Earned $21,600 in cash revenue 4. Paid S10500 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 $3,000 Use straight-line depreciation The adjusting entry was made as of December 31 Year 1 Exercise 8-7A Parto Required a. Record the above transactions in a horizontal statements model in the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA) and not change in cash (NC) Enter any decreases to account balances and cash outflows with a minus sign. Not all cells in the Statement of Cash Flows column may require an input leave cells blank if there is no corresponding input needed) GULF SEAFOOD Horizontal Statements Model Balance Sheet Income Statement Accumulated Depreciation Equity Common Retained Stock 18,000 Revenue Expense Net Income Statement of Cash Flows 1 10.000 12.100- 21600 (10 600 2.100 21.600 10600 18,000 12.100 21,000 21,600 FA IA OA 21,000 (10,000) 10.000 12.100 0 18.000 11000 26.000 10.000 11.000 51.700