Required information Exercise 8-7A (Algo) Effect of depreciation on the accounting equation and financial statements LO 8-2 The following information applies to the questions displayed below.) The following events apply to Gulf Seafood for the Year 1 fiscal years 1. The company started when it acquired $18,000 cash by Issuing common stock 2. Purchased a new cooktop that cost $14,900 cash. 3. Earned $20,300 in cash revenue. 4. Pald $11.200 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 adjustment was made as of December 31, Year 1. Exercise 8-7A (Algo) Part a Required o. Record the above transactions in a horizontal statements model. (In the Statement of Cash Flows column, use the initials (OA), on investing activity (IA), a financing activity (FA) and net change in cash (NC). Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input.) GULF SEAFOOD Horizontal Statements Model Balance Sheet Assets Stockholder's Equity Equipment Common Retained Revenue (BV) Stock Earnings Income Statement Event Statement of Cash Flows Cash Expense Net Income 1 2 3 4 5 Bal ++ O Required information Exercise 8-7A (Algo) Effect of depreciation on the accounting equation and financial statements LO 8-2 [The following information applies to the questions displayed below.) The following events apply to Gulf Seafood for the Year 1 fiscal year 1. The company started when it acquired $18,000 cash by issuing common stock 2. Purchased a new cooktop that cost $14.900 cash. 3. Earned $20,300 in cash revenue. 4. Paid $11.200 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 adjustment was made as of December 31. Year 1 Exercise 8-7A (Algo) Part b b. What amount of depreciation expense would Gulf Seafood report on the Yeat Income statement? Deprecaton expense ! Required information Exercise 8-7A (Algo) Effect of depreciation on the accounting equation and financial statements LO 8-2 The following information applies to the questions displayed below.) The following events apply to Gulf Seafood for the Year 1 fiscal year: 1. The company started when it acquired 518,000 cash by issuing common stock. 2. Purchased a new cooktop that cost $14.900 cash. 3. Eamed $20,300 in cash revenue. 4. Pald $11.200 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 adjustment was made as of December 31, Year 1 Exercise 8-7A (Algo) Part c. What amount of accumulated depreciation would Gulf Seafood report on the December 31, Year 2 balance sheet? Accumulated depreciation Required information Exercise 8-7A (Algo) Effect of depreciation on the accounting equation and financial statements LO 8-2 The following information applies to the questions displayed below.) The following events apply to Gulf Seafood for the Year 1 fiscal year 1. The company started when it acquired $18,000 cash by issuing common stock 2. Purchased a new cooktop that cost $14.900 cash. 3. Earned $20,300 in cash revenue. 4. Pald $11.200 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 adjustment was made as of December 31, Year 1. Exercise 8-7A (Algo) Part d d. Would the cash flow from operating activities be affected by depreciation in Year 1? 0 Yes O No
