The following events apply to Sam’s Seafood for the 2013 fiscal year:
1. The company started when it acquired $50,000 cash by issuing common stock.
2. Purchased a new cook top that cost $35,000 cash.
3. Earned $36,000 in cash revenue.
4. Paid $12,000 cash for salaries expense.
5. Adjusted the records to reflect the use of the cook top. Purchased on January 1, 2013, the cook top has an expected useful life of four years and an estimated salvage value of $3,000. Use straight-line depreciation. The adjusting entry was made as of December 31, 2013.

a. Record the events in general journal format and post to T-accounts.
b. Prepare a balance sheet and a statement of cash flows for the 2013 accounting period.
c. What is the net income for 2013?
d. What amount of depreciation expense would Sam’s report on the 2014 income statement?
e. What amount of accumulated depreciation would Sam’s report on the December 31, 2014, balance sheet?
f. Would the cash flow from operating activities be affected by depreciation in 2014?

  • CreatedOctober 26, 2013
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