Report plant assets, depreciation, and investing cash flows
Response to the following problem:
Assume that on January 1, 2014, an Early Risers Cafe purchased a building, paying $54,000 cash and signing a $104,000 note payable. The restaurant paid another $65,000 to remodel the building. Furniture and fixtures cost $51,000, and dishes and supplies-a current asset-were obtained for $9,000. All expenditures were for cash. Assume that all of these expenditures occurred on January 1, 2014. Early Risers Café is depreciating the building over 25 years by the straight-line method, with estimated residual value of $50,000. 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 $1,600.
Show what the restaurant will report for supplies, plant assets, and cash flows at the end of the first year on its
¦ income statement,
¦ balance sheet, and
¦ statement of cash flows (investing only).