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.

b. What amount of depreciation expense would Gulf Seafood report on the 2018 income statement?

c. What amount of accumulated depreciation would Gulf Seafood report on the December 31, 2019, balance sheet?

d. Would the cash flow from operating activities be affected by depreciation in 2018?

Solution

Depreciaiton=(cost-salvage)/years

=(15700-2800)/4=3225

This is the depreciation expense to be reported in income statement in 2018