P11-60A. (Learning Objectives 2, 3, 4, 5: Preparing an Income Statement, Balance Sheet, and statement of cash flows—indirect method) Vintage Automobiles of Dubai, Inc., was formed on January 1, 20X6. The following transactions occurred during 20X6:

On January 1, 20X6, Vintage issued its shares for $440,000. Early in January, Vintage made the following cash payments:

a. $190,000 for equipment

b. $210,000 for inventory (seven cars at $29,000 each)

c. $18,000 for 20X6 rent on a store building In February, Vintage purchased two cars for inventory on account. Cost of this inventory was

$90,000 ($45,000.00 each). Before year-end, Vintage paid $56,000 of this debt. Vintage uses the FIFO method to account for inventory.

During 20X6, Vintage sold eight cars for a total of $496,000. Before year-end, Vintage collected 80% of this amount.

The business employs five people. The combined annual payroll is $125,000, of which Vintage owes $8,000 at year-end. At the end of the year, Vintage paid income tax of $12,500.

Late in 20X6, Vintage declared and paid cash dividends of $13,000.

For equipment, Vintage uses the straight-line depreciation method, over five years, with zero residual value.

Requirements 1. Prepare Vintage Automobiles of Dubai, Inc.’s Income Statement for the year ended December 31, 20X6.

2. Prepare Vintage’s Balance Sheet at December 31, 20X6.

3. Prepare Vintage’s statement of cash flows for the year ended December 31, 20X6. Format cash flows from operating activities by using the indirect method.

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