# Question: Assume that on January 1 2014 a Sunrise Bakery restaurant

Assume that on January 1, 2014, a Sunrise Bakery restaurant purchased a building, paying \$53,000 cash and signing a \$103,000 note payable. The restaurant paid another \$66,000 to remodel the building. Furniture and fixtures cost \$59,000, and dishes and supplies—a current asset—were obtained for \$9,600. All expenditures were for cash. Assume that all of these expenditures occurred on January 1, 2014. Sunrise Bakery is depreciating the building over 25 years by the straight-line method, with estimated residual value of \$56,000. 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 \$1,500. 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)
The purchase of dishes and supplies is an operating cash flow because supplies are a current asset.

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