The following events apply to Gulf Seafood for the Year 1 fiscal year: 1. The company started when it acquired $17,000 cash by issuing common stock. 2. Purchased a new cooktop that cost $12,400 cash 3. Eamed $24,000 in cash revenue. 4. Paid $12,600 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 $2,700. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1 Required a. Record the above transactions in a horizontal statements model b. What amount of depreciation expense would Gulf Seafood report on the Year 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 offected by depreciation in Year 1? GULF SEAFOOD Horizontal Statements Model Balance Sheet Income Statement Event Equity Net Statement of Cash Flows Revenue Common Stock 37,000 Retained Earnings Expense + Income 1 + Assets BV Cash Equipment 37,000 - (36,000) . 36,000 50,000 (34.000) (2,700) 17.000 33,300 ELLE 2 3 4. 5. Bal 50,000 OOS +++ 50,000 (34,000) (2.700) 13,300 37,000 X FA (38,000) 50,000 50,000 0 (34,000) (34,000) (2.700) 13,300 17,000 NO + 34.000 x = 2,700 = 36,700 = 37,000 + 50,000 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? b. $ 6,500 13,000 S Depreciation expense on Year 1 income statement Accumulated depreciation on December 31, Year 2, balance sheet Would the cash flow from operating activities be affected by depreciation In Year 12 Yes d.