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 displayed below.] The following events apply to Gulf Seafood for the Year 1 fiscal year: 1. The company started when it acquired $32,000 cash by issuing common stock. 2. Purchased a new cooktop that cost $12,900 cash. 3. Earned $17,700 in cash revenue 4. Paid $12,100 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 five years and an estimated salvage value of $3,100. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1. Journal entry worksheet Record depreciation expense. Note: Enter debits before credits. Event General Journal Debit Credit Record entry Clear entry View general journal b. Prepare a balance sheet and a statement of cash flows for the Year 1 accounting period. (Amounts to be deducted should be indicated by a minus sign.) GULF SEAFOOD Balance Sheet As of December 31, Year 1 Assets Total Assets Liabilities Stockholders' equity Total stockholders' equity Total liabilities and stockholders' equity Cash Equipment- Cooktop Beg. Bal 32,000 Beg. Bal 17,700 12,900 1 12,100 4 12,100 End. Bal $ 24,700 End. Bal $ 12,100 Accumulated Depr Common Stock Beg. Bal Beg. Bal End. Bal End. Bal Sales Revenue Salaries Expense Beg. Bal Beg. Bal End. Bal End. Bal Depreciation Expense Beg. Bal End. Bal GULF SEAFOOD Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flows from operating activities: Net cash flow from operating activities Cash flows from investing activities Net cash flow from investing activities Cash flows from financing activities Net cash flow from financing activities Net change in cash Ending cash balance View transaction list Journal entry worksheet Record cash received from revenue. Note: Enter debits before credits. Event General Journal Debit Credit Cash 17,700 Sales revenue 17,700 Record entry Clear entry View general journal View transaction list Journal entry worksheet Record purchase of equipment for cash. Note: Enter debits before credits. Event General Journal Debit Credit Maintenance expense 12,900 Cash 12,900 Record entry Clear entry View general journal