Assume that in January 20X6, an IHOP restaurant purchased a building, paying $50,000 cash and signing a $100,000 note payable. The restaurant paid another $60,000 to remodel the building. Furniture and fixtures cost $50,000, and dishes and supplies-a current asset-were obtained for $9,000.

IHOP is depreciating the building over 20 years by the straight-line method, with estimated residual value of $50,000. The furniture and fixtures will be replaced at the end of 5 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 $2,000.

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

• Statement of cash flows (investing only)

Show all computations.

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