Use the American Reserve Rare Coins data from Problem 16-33A.

Requirements 

1. Prepare American Reserve Rare Coins' 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 direct method, as shown in Exhibit 16A-3.

Exhibit 16A-3

Problem 16-33A

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.

Transcribed Image Text:

ANCHOR CORPORATION Statement of Cash Flows Year Ended December 31, 2008 Cash flows from operating activities: Receipts: Collections from customers Interest received Dividends received Total cash receipts Payments: To suppliers To employees For interest For income tax (In thousands) $269 12 9 $290 $(135) (56) (15) (14) (220) 70 Total cash payments Net cash provided by operating activities Cash flows from investing activities: Acquisition of plant assets Cash receipts from sale of plant assets Net cash used for investing activities Cash flows from financing activities: Acquisition of plant assets Cash receipts from sale of plant assets Net cash used for investing activities Cash flows from financing activities: Cash receipts from issuance of common stock Cash receipts from issuance of notes payable Payment of note payable Payment of dividends Net cash provided by financing activities Net decrease in cash $(310) 50 (260) $(310) 50 (260) $ 100 90 (10) (10) 170 Cash balance, December 31, 2007 Cash balance, December 31, 2008 $ (20) 42 $ 22