Vintage Automobiles of Orangeville Ltd. was formed on January 1, 2017, when Vintage issued common shares for $300,000.
Vintage Automobiles of Orangeville Ltd. was formed on January 1, 2017, when Vintage issued common shares for $300,000. Early in January 2017, Vintage made the following cash payments:
a. $150,000 for equipment
b. $120,000 for inventory (four cars at $30,000 each)
c. $20,000 for 2017 rent on a store building
In February 2017, Vintage purchased six cars for inventory on account. Cost of this inventory was $260,000 ($43,333.33 each). Before year-end, Vintage paid $208,000 of this debt. Vintage uses the FIFO method to account for inventory.
During 2017, Vintage sold eight vintage autos for a total of $500,000. Before year-end,
Vintage collected 80% of this amount.
The business employs three people. The combined annual payroll is $95,000, of which
Vintage owes $4,000 at year-end. At the end of the year, Vintage paid income tax of $10,000. Late in 2017, Vintage declared and paid cash dividends of $11,000.
For equipment, Vintage uses the straight-line depreciation method over five years with zero residual value.
1. Prepare Vintage's income statement for the year ended December 31, 2017. Use the single-step format, with all revenues listed together and all expenses listed together.
2. Prepare Vintage's balance sheet at December 31, 2017.
3. Prepare Vintage's statement of cash flows for the year ended December 31, 2017. Format cash flows from operating activities by using the direct method?