American Reserve Rare Coins (ARRC) 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 ARRC'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 Reserve Rare Coins Income Statement Year Ended December 31, 2018 Revenue: Sales Revenue Expenses: Cost of Goods Sold $ 260,000 Salaries and Wages Expense 86,000 Income Tax Expense 20,000 Depreciation Expense 10,800 Rent Expense 21,000 682,500 More Info a. On January 1, 2018, ARRC issued no par common stock for $550,000. b. Early in January, ARRC made the following cash payments: 1. For store fixtures, $54,000 2. For merchandise inventory, $300,000 3. For rent expense on a store building, $21,000 c. Later in the year, ARRC purchased merchandise inventory on account for $235,000. Before year-end, ARRC paid $135,000 of this accounts payable. d. During 2018, ARRC sold 2,100 units of merchandise inventory for $325 each. Before year-end, the company collected 85% of this amount. Cost of goods sold for the year was $260,000, and ending merchandise inventory totaled $275,000. e. The store employs three people. The combined annual payroll is $86,000, of which ARRC still owes $2,000 at year-end. f. At the end of the year, ARRC paid income tax of $20,000. There are no income taxes payable. g. Late in 2018, ARRC paid cash dividends of $40,000. h. For store fixtures, ARRC uses the straight-line depreciation method, over five years, with zero residual value. Print Done Total Expenses Net Income 397,800 $ 284,700 Requirement 3. Prepare ARRC's balance sheet at December 31, 2018. American Reserve Rare Coins Assets Balance Sheet December 31, 2018 Liabilities Choose from any list or enter any number in the input fields and then click Check Answer.