American Rare Coins (ARC) was formed on January 1, 2018. Additional data for the year follow: (Click the icon to view the data.) Read the requirements Requirement 1. What is the purpose of the statement of cash flows? The purpose of the statement of cash flows is to show where cash came from and how cash was spent during the period. Requirement 2. Prepare ARC's income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses listed together. American Rare Coins Income Statement Year Ended December 31, 2018 More info Revenue: Sales Revenue Expenses: Cost of Goods Sold Rent Expense Salaries and Wages Expense Depreciation Expense Income Tax Expense Total Expenses Net Income $ 250,000 20,000 96.000 10,600 17,000 $ 660,000 393,600 $ 266,400 Requirement 3. Prepare ARC's balance sheet at December 31, 2018. American Rare Coins Assets Current Assets: Cash Accounts Receivable Merchandise Inventory Total Current Assets Balance Sheet December 31, 2018 Liabilities Current Liabilities: Accounts Payable Salaries Payable Total Current Liabilities Property, Plant, and Equipment: Store Fixtures Less: Accumulated Depreciation Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity Total Assets Total Liabilities and Stockholders' Equity C a. On January 1, 2018, ARC issued no par common stock for $450,000. b. Early in January, ARC made the following cash payments: Requirements 1. For store fixtures, $53,000 2. For merchandise inventory, $340,000 3. For rent expense on a store building, $20,000 c. Later in the year, ARC purchased merchandise inventory on account for $239,000. Before year-end, ARC paid $139,000 of this accounts payable. d. During 2018, ARC sold 2,400 units of merchandise inventory for $275 each. Before year-end, the company collected 85% of this amount. Cost of goods sold for the year was $250,000, and ending merchandise inventory totaled $329,000. 1. What is the purpose of the statement of cash flows? 2. Prepare ARC's income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses listed together. 3. Prepare ARC's balance sheet at December 31, 2018. 4. e. The store employs three people. The combined annual payroll is $96,000, of which ARC still owes $3,000 at year-end. Prepare ARC's statement of cash flows using the indirect method for the year ended December 31, 2018. f. At the end f the year, ARC paid income tax of $17,000. There are no income taxes payable. g. Late in 2018, ARC paid cash dividends of $44,000. h. For store fixtures, ARC uses the straight-line depreciation method, over five years, with zero residual value. Print Done Print Done - X