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In: Accounting

Required information [The following information applies to the questions displayed below.] The following events apply to...

Required information

[The following information applies to the questions displayed below.]

The following events apply to Gulf Seafood for the 2018 fiscal year:

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

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

Earned $72,000 in cash revenue.

Paid $25,000 cash for salaries expense.

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 $4,000. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018.

Required

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). The letters NA indicate that an element is not affected by the event. Enter any decreases to account balances and cash outflows with a minus sign.)

Solutions

Expert Solution

ASSETS Liabilities Equity
Event Cash + AR + Inventory + Gross Fixed Assets - Accumulated Depreciation = Current Liabilities + Long term debt + Common stock + Retained Earnings Rev. - Exp. = Net Income Cash flow
         1 $60,000.00 + + + - = + + $60,000.00 + - = FA
         2 -$40,000.00 + + + $40,000.00 - = + + + - = IA
         3 $72,000.00 + + + - = + + + $72,000.00 - = $72,000.00 OA
         4 -$25,000.00 + + + - = + + + - $25,000.00 = -$25,000.00 OA
         5 + + + - $9,000.00 = + + + - $9,000.00 = -$9,000.00 OA
         6 + + + - = + + + - =
$67,000.00 $0.00 $0.00 $40,000.00 $9,000.00 $60,000.00 $0.00 $72,000.00 $34,000.00 $38,000.00
Depreciation per year using straight line method = (Cost - salvage value) / useful life = ($40000 - $4000)/4 years = $9000

ekkarill92 answered 2 years ago
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