The following events apply to Gulf Seafood for the 2016 fiscal year: 1. The company started when

Question:

The following events apply to Gulf Seafood for the 2016 fiscal year:

1. The company started when it acquired $60,000 cash by issuing common stock.

2. Purchased a new cooktop that cost $40,000 cash.

3. Earned $72,000 in cash revenue.

4. Paid $25,000 cash for salaries expense.

5. Adjusted the records to reflect the use of the cooktop. Purchased on January 1, 2016, the cooktop has an expected useful life of four years and an estimated salvage value of $4,000.

Use straight-line depreciation. The adjusting entry was made as of December 31, 2016.

Required

a. Record the events in general journal format and post to T-accounts.

b. Prepare a balance sheet and a statement of cash flows for the 2016 accounting period.

c. What is the net income for 2016?

d. What amount of depreciation expense would Gulf Seafood report on the 2017 income statement?

e. What amount of accumulated depreciation would Gulf Seafood report on the December 31, 2017, balance sheet?
f. Would the cash flow from operating activities be affected by depreciation in 2017?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...