Answer only. ---The following events apply to Tracey’s Restaurant for the Year 1 fiscal year:1. Started the company when it acquired $29,000 cash from the issue of common stock.2. Purchased a new cooktop that cost $28,000 cash.3. Earned $42,000 in cash revenue.4. Paid $26,000 cash for salaries expense.5. Paid $8,000 cash for operating expenses.6. Adjusted the records to reflect the use of the cooktop. The cooktop, purchased on January 1, Year 1, has an expected useful life of four years and an estimated salvage value of $2,000. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1.Required:a. Record the events in general ledger accounts under an accounting equation. (Negative amounts should be indicated by a minus sign.)**TRACEY’S RESTAURANT***Accounting Equation for Year 1*| Event | Assets | Stockholders’ Equity ||-----------------|------------------------------------------|-------------------------------------------|| | Cash | Cooktop | Accum. Depr. | = Com. Stock | + Retained Earnings ||-----------------|-------|---------|----------------|---------------|---------------------|| 1. Issue stk. | | | | | || 2. Pur. cooktop | | | | | || 3. Rev. | | | | | || 4. Paid sal exp.| | | | | || 5. Paid op. exp.| | | | | || 6. Dep. exp | | | | | ||-----------------|-------|---------|----------------|---------------|---------------------|| Totals | $0 | $0 | $0 | $0 | $0 |**Notes:**1. **Issue stk.** - Reflects the issuance of common stock and the initial cash inflow.2. **Pur. cooktop** - Accounts for the cash outflow pertaining to the purchase of a new cooktop.3. **Rev.** - Represents the cash revenue earned by the company.4. **Paid sal exp.** - Accounts for the cash outflow for ### Depreciation Expenses and Accumulated DepreciationIn this section, we will focus on the calculation of depreciation expenses and accumulated depreciation for financial reporting purposes. #### b. Depreciation Expense for Year 2**Question:**What amount of depreciation expense would Tracey's report on the Year 2 income statement?**Data Input:**- Depreciation expense: [ ]#### c. Accumulated Depreciation as of December 31, Year 2**Question:**What amount of accumulated depreciation would Tracey's report on the December 31, Year 2 balance sheet?**Data Input:**- Accumulated depreciation: [ ]

Solution (a). Tracey's Restaurant Effect of events on the financial statements Event no.…

The following events apply to Tracey's Restaurant for the Year 1 fiscal year: 1. Started the company when it acquired $29,000 cash from the issue of common stock. 2. Purchased a new cooktop that cost $28,000 cash. 3. Earned $42,000 in cash revenue. 4. Paid $26,000 cash for salaries expense. 5. Paid $8,000 cash for operating expenses. 6. Adjusted the records to reflect the use of the cooktop. The cooktop, purchased on January 1, Year 1, has an expected useful life of four years and an estimated salvage value of $2,000. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1.

The following events apply to Tracey's Restaurant for the Year 1 fiscal year: 1. Started the company when it acquired $29,000 cash from the issue of common stock. 2. Purchased a new cooktop that cost $28,000 cash. 3. Earned $42,000 in cash revenue. 4. Paid $26,000 cash for salaries expense. 5. Paid $8,000 cash for operating expenses. 6. Adjusted the records to reflect the use of the cooktop. The cooktop, purchased on January 1, Year 1, has an expected useful life of four years and an estimated salvage value of $2,000. Use straight-line depreciation. The adjusting entry was made as of December 31, Year 1.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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