E7-20A. (Learning Objectives 1, 4, 7: Reporting PPE; depreciation; and investing cash flows) Assume that in January 20X6, an Hotcake House restaurant purchased a building, paying $57,000 cash and signing a $108,000 note payable. The restaurant paid another $60,000 to remodel the building. Furniture and fixtures cost $54,000, and dishes and supplies—a current asset—were obtained for $10,200.

Hotcake House is depreciating the building over 20 years by the straight-line method, with estimated residual value of $55,000. The furniture and fixtures will be replaced at the end of five years and are being depreciated by the double-declining-balance method, with zero residual value. At the end of the first year, the restaurant still has dishes and supplies worth $1,900.

Show what the restaurant will report for supplies, PPE, and cash flows at the end of the first year on its:

■ Income Statement

■ Balance Sheet

■ Statement of cash flows (investing only)

Note: The purchase of dishes and supplies is an operating cash flow because supplies are a current asset.