0 Required information [The following information applies to the questions displ

Question

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

Explanation / Answer

Answer to Part c.

Straight Line Depreciation per year = (Cost – Salvage Value) / Useful Life
Straight Line Depreciation per year = (15,700 – 2,800) / 4
Straight Line Depreciation per year = $3,225

Accumulated Depreciation to be reported in December 31, 2019 Balance Sheet = Straight Line Depreciation per year * 2
Accumulated Depreciation to be reported in December 31, 2019 Balance Sheet = $3,225 * 2
Accumulated Depreciation to be reported in December 31, 2019 Balance Sheet = $6,450

Answer to Part d.

Yes, Depreciation expense would effect Cash Flow from Operating activities, as they need to be added to Net Income.

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