Question
Classic Reserve Rare Coins (CRRC) was formed on January 1, 2010. Additional data for the year follows: a. On January 1, 2010, CRRC issued common
Classic Reserve Rare Coins (CRRC) was formed on January 1, 2010. Additional data for the year follows:
a. | On January 1, 2010, CRRC issued common stock for $500,000. | |
b. | Early in January, CRRC made the following cash payments: | |
1. | For store fixtures, $55,000 | |
2. | For inventory, $330,000 | |
3. | For rent expense on a store building, $13,000 | |
c. | Later in the year, CRRC purchased inventory on account for $241,000. Before year-end, CRRC paid $151,000 of this account payable. | |
d. | During 2010, CRRC sold 3,000 units of inventory for $ 200 each. Before year end, the company collected 85% of this amount. Cost of goods sold for the year was $250,000, and ending inventory totaled $321,000. | |
e. | The store employs three people. The combined annual payroll is $94,000, of which CRRC still owes $6,000 at year-end. | |
f. | At the end of the year, CRRC paid income tax of $16,000. | |
g. | Late in 2010, CRRC paid cash dividends of $42,000. | |
h. | For equipment, CRRC uses the straight-line depreciation method, over five years, with zero residual value. |
Requirements
1. | What is the purpose of the cash flow statement? |
2. | Prepare CRRC's Income Statement for the year ended December 31, 2010. Use the single-step format, with all revenues listed together and all expenses together. |
3. | Prepare CRRC's Balance Sheet at December 31, 2010. |
4. | Prepare CRRC's Statement of Cash Flows using the indirect method for the year ended December 31, 2010. |
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