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 $18,000 cash by issuing common stock. 2. Purchased a new cooktop that cost $15,600 cash 3. Earned $20,400 in cash revenue. 4. Paid $11,600 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 $2,900. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018 a. 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 Balance Sheet Income Statement Statement of Cash Flows Equity Assets Event Net Income Revenue Expense Accumulated Depreciation Common Stock Retained Cash Equipment Earnings 1 2 3. = = 4 + 5 + - - 0 0 0 Bal b. What amount of depreciation expense would Gulf Seafood report on the 2018 income statement? Depreciation expense c. What amount of accumulated depreciation would Gulf Seafood report on the December 31, 2019, balance sheet? Accumulated depreciation d. Would the cash flow from operating activities be affected by depreciation in 2018? O Yes O No