(Learning Objectives 1, 2, 6: Reporting PPE, depreciation, and investing cash fl ows)

Assume that in January 20X6, an Oatmeal House restaurant purchased a building, paying

$56,000 cash and signing a $107,000 note payable. The restaurant paid another $61,000 to remodel the building. Furniture and fi xtures cost $53,000, and dishes and supplies—a current asset—were obtained for $9,200.

Oatmeal House is depreciating the building over 20 years by the straight-line method, with estimated residual value of $55,000. The furniture and fi xtures will be replaced at the end of fi ve years and are being depreciated by the double-declining-balance method, with zero residual value. At the end of the fi rst year, the restaurant still has dishes and supplies worth $1,700.

Show what the restaurant will report for supplies, PPE, and cash fl ows at the end of the fi rst year on its:

■ Income statement

■ Balance sheet

■ Statement of cash fl ows (investing only)

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