Cruise Canada Motorhomes Inc. (CCM) was formed on January 1, 2014, when the company issued its common shares for $200,000. Early in January, CCM made the following cash payments:
a. For showroom fixtures, $50,000
b. For inventory, two motorhomes at $60,000 each, a total of $120,000
c. For rent on a store building, $12,000
In February, CCM purchased three motorhomes on account. Cost of this inventory was $160,000 ($53,333.33 each). Before year-end, CCM paid $140,000 of this debt. CCM uses the FIFO method to account for inventory.
During 2014, CCM sold four motorhomes for a total of $560,000. Before year-end, CCM collected 90% of this amount.
The store employs three people. The combined annual payroll is $90,000, of which CCM owes $3,000 at year-end. At the end of the year, CCM paid income tax of $64,000.
Late in 2014, CCM declared and paid cash dividends of $40,000.
For showroom fixtures, CCM uses the straight-line depreciation method over five years with zero residual value.
Requirements
1. Prepare CCM's income statement for the year ended December 31, 2014. Use the single-step format, with all the revenues listed together and all expenses listed together.
2. Prepare CCM's balance sheet at December 31, 2014.
3. Prepare CCM's statement of cash flows for the year ended December 31, 2014. Format cash flows from operating activities by using the direct method.