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

a. The company started when it acquired $39,000 cash by issuing common stock.
b. Purchased a new cooktop that cost $15,400 cash.
c. Earned $23,900 in cash revenue.
d. Paid $14,000 cash for salaries expense.
e. 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.

Required:
Record the above transactions in a horizontal statements model.

Sagot :

Answer:

Cash + Equipment - Accumulated depreciation = Common stock + Retained = $46,460

Explanation:

Note: See the attached excel file for the horizontal statements model.

In the attached excel file, we have:

Accumulated depreciation = (Cost of cooktop or equipment - Estimated salvage value) / Expected useful life = ($39,000 - $3,200) / 5 = $2,440

From the attached excel file, the accounting equation can be proved from the balances as follows:

Cash + Equipment - Accumulated depreciation = $33,500 + 15,400 - $2,440 = $46,460

Common stock + Retained = $39,000 + $7,460 = $46,460

Therefore, we have:

Cash + Equipment - Accumulated depreciation = Common stock + Retained = $46,460

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