Required information The following information applies to th

Required information

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

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

1. The company started when it acquired $17,000 cash by issuing common stock.

2. Purchased a new cooktop that cost $15,700 cash.

3. Earned $20,200 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, 2018, the cooktop has an expected useful life of four years and an estimated salvage value of $2,800. Use straight-line depreciation. The adjusting entry was made as of December 31, 2018.

Required

a. 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. (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.)

GULF SEAFOOD Horizontal Statements Mo Balance Sheet Event Assets Equity Accumulated Depreciation Common Stock Retained Earnings Cash Equipment [- 2. 3. 4. 5. Bal

Solution

Balance sheet Income statement statement of cash flow Event Asset Equity = cash + equipment - Accumulated depreciation = common stock + retained earning Revenue - expense = net income 1 +17000 +17000 +17000 Financing activity 2 -15700 +15700 -15700 IA 3 +20200 +20200 +20200 +20200 +20200 OA 4 -12600 -12600 12600 -12600 -12600 OA 5 3225 -3225 3225 -3225 0 NA 8900 + 15700 - 3225 = 17000 + 4375 20200 - 9375 8900 NC