On January 1, 2018, Little City Bar & Grill purchased a building, paying $58,000 cash and signing a $110,000 note payable. The company paid another $62,000 to remodel the building. Furniture and fixtures cost $55,000, and dishes and supplies—a current asset—were obtained for $9,400. All expenditures were for cash. Assume that all of these expenditures occurred on January 1, 2018.
Little City is depreciating the building over 25 years using the straight-line method, with an estimated residual value of $51,000. The furniture and fixtures will be replaced at the end of five years and are being depreciated using the double-declining-balance method, with a residual value of zero. At the end of the first year, the company still had dishes and supplies worth $1,300.
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Show what the company reported 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).
The purchase of dishes and supplies is an operating cash flow because supplies are a current asset.