American Reserve Rare Coins (ARRC) was formed on January 1, 2006, when ARRC issued its common stock for \($200,000.\) Early in January, ARRC made the following cash payments:

a. For store fixtures, $50,000

b. For inventory, $100,000

c. For rent expense on a store building, \($10,000\) Later in the year, ARRC purchased inventory on account for $240,000.

Before\) year-end, ARRC paid \($140,000\) of this account payable. During 2006, ARRC sold 2,500 units of inventory for \($200\) each. Before year-end, the company collected 90% of this amount. Cost of goods sold for the year was \($300,000,\) and ending inventory totaled \($40,000.\) The store employs three people. The combined annual payroll is \($90,000,\) of which ARRC still owes \($5,000\) at year-end. At the end of the year, ARRC paid income tax of \($20,000.\) Late in 2006, ARRC declared and paid cash dividends of \($40,000.\) For equipment, ARRC uses the straight-line depreciation method, over 5 years, with zero residual value.

Requirements 

1. Prepare American Reserve's income statement for the year ended December 31, 2006. Use the single-step format, with all revenues listed together and all expenses together 2. Prepare American Reserve's balance sheet at December 31, 2006.

3. Prepare American Reserve's statement of cash flows for the year ended December 31, 2006. Format cash flows from operating activities by the indirect method.