Coleman Motors, Inc., was formed on January 1, 2018. The following transactions occurred during 2018:

On January 1, 2018, Coleman issued its common stock for $350,000. Early in January, Coleman made the following cash payments:

a. $140,000 for equipment

b. $175,000 for inventory (five cars at $35,000 each)

c. $19,000 for 2018 rent on a store building

In February, Coleman purchased six cars for inventory on account. The cost of this inventory was $282,000 ($47,000 per car). Before year-end, the company paid off $197,400 of this debt.

The company uses the first-in, first-out (FIFO) method to account for its inventory. During 2018, Coleman sold six autos for a total of $426,000. Before year-end, it had collected 90% of this amount.

The business employs three people. The combined annual payroll is $90,000, of which Coleman owes $5,000 at year-end. At the end of the year, the company paid income taxes of $14,000.

Late in 2018, Coleman declared and paid cash dividends of $29,000. For equipment, Coleman uses the straight-line depreciation method, over five years, with zero residual value.

Requirements

1. Prepare Coleman’s income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses together.

2. Prepare Coleman’s balance sheet at December 31, 2018.

3. Prepare Coleman’s statement of cash flows for the year ended December 31, 2018. Format cash flows from operating activities using the indirect method.