Question

The following events apply to gulf seafood for the year 1 fiscal year :

1. the company started when it acquired $33,000 cash by issuing common stock.
2. purchased a new cooktop that cost $12,800 cash.
3. earned $22,300 in cash revenue.
4. paid $13,800 cash for salaries expense.
5. adjusted the records to reflect the use of the cooktop. purchased on january 1, year 1, the cooktop has an expected useful life of five years and an estimated salvage value of $3,200. use straight-line depreciation. the adjusting entry was made as of december 31, year 1.

record the above transactions in a horizontal statements model.

Answer 1

The financial activities for Gulf Seafood include starting with cash from stock issuance, purchasing a cooktop, generating revenue, paying salaries, and adjusting for cooktop depreciation using the straight-line method.

Step-by-step explanation:

The subject inquiry concerns recording financial transactions, including equipment purchase and depreciation, and determining accounting profit for Gulf Seafood for a fiscal year. First, the company acquired $33,000 cash by issuing common stock, which would increase cash and equity on the balance sheet.

Next, Gulf Seafood purchased a new cooktop for $12,800 cash, which would decrease cash and increase property and equipment assets. The company earned $22,300 in cash revenue, which increases both cash and revenues. They incurred expenses by paying $13,800 cash for salaries, which would reduce cash and increase expenses.

For the cooktop, the straight-line depreciation method is used to distribute its cost over its useful life, excluding the salvage value. With a useful life of five years and a salvage value of $3,200, the annual depreciation expense is $1,920 [($12,800 - $3,200) / 5]. This depreciation expense would be an adjusting entry, increasing expenses and reducing the book value of the cooktop on the balance sheet.