Question

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

  

1.	The company started when it acquired $37,000 cash by issuing common stock.
2.	Purchased a new cooktop that cost $14,900 cash.
3.	Earned $21,300 in cash revenue.
4.	Paid $14,000 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 five years and an estimated salvage value of $3,400. Use straight-line depreciation. The adjusting entry was made as of December 31, 2016.

Required

a.	Record the events in general journal format.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Event 1: record entry for issuance of common stock

Event 2: record purchase of equipment for cash

Event 3: record cash received from revenue

Event 4: record cash paid for salaries expenses

Event 5: record depreciation expense

b. Then post them to T-accounts.

	Cash Equipment - Cook top Beg. Bal Beg. Bal End. Bal End. Bal 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

c.

Prepare a balance sheet and a statement of cash flows for the 2016 accounting period. (Amounts to be deducted should be indicated by a minus sign.)
	GULF SEAFOOD Balance Sheet As of December 31, 2016 Assets Total Assets Liabilities Stockholders’ equity Total stockholders’ equity Total liabilities and stockholders’ equity

	GULF SEAFOOD Statement of Cash Flows For the Year Ended December 31, 2016 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

Answer 1

a. 1. Cash account Debit $37,000

Common stock account Credit $37,000

2. Cook top account (equipment) Debit $14,900

Cash account Credit $14,900

3.Cash account Debit $21,300

Sales account Credit $21,300

4. Salaries account Debit $14,000

Cash account Credit $14,000

5. Profit & Loss account Debit $2,300

Depreciation expense account Credit $2,300

  Depreciation expense account Debit $2,300

Accumulated depreciation account Credit $2,300

b. T accounts

Cash account

Opening balace	-	Cook top	14,900
Common stock	37,000	Salaries	14,000
Sales	21,300	balance c/d	29,400
balance b/d	29400

Equipment account

Balance	-	Balance c/d	14,900
Cash	14,900
Balance b/d	14,900

Accumulated depreciation account

balance c/d	2,300	Balance	-
		Depreciation expense	2,300
		balance b/d	2,300

Common stock account

Balance c/d	37,000	Cash	37,000
		balance b/d	37,000

Sales account

Cash	21,300	Pofit & Loss account/Income stat	21,300
Balance	0	Balance	0

Depreciation expense account

Accumulated depreciation	2,300	P&L account/Income stat	2,300
Balance	0	Balance	0

c.

GULF SEAFOOD

Balance Sheet

As of December 31, 2016

Assets		in $
Cook Top (equipment)	14,900
less: Accumulated dereciation	(2,300)	12,600
Cash balance		29,400
Total Assets		42,000
Liabilities
Stockholders equity :
Common stock		37,000
Income statement balance		5,000
Total Liabilities and equity holders fund		42,000

GULF SEAFOOD

Statement of Cash Flows

For the Year Ended December 31, 2016

Cash flows from operating activities:
Net profit	5,000
Add: Depreciation	2,300
Net cash flows from operating activities		7,300
Cash flows from investing activities:
Purchase of equipment(cook top)	(14,900)
Net cash flows from investing activities		(14,900)
Cash flows from financing activities:
Issue of common stock	37,000
Net cash flows from financing activities		37,000
Net change in cash		29,400
Ending cash balance		29,400