Homework: Statement of Cash Flows Exercises $-$

Question $1,$ PF$14-30$A $($similar to$)$

HW Score: $74\mathrm{.}95\%,57\mathrm{.}71$ of T$7$ points

Part $1$ of $7$

Points: $27\mathrm{.}66$ of $41$

Question list

American Reserve Rare Coins $($ARRC$)$ was formed on January $1,2025.$ Additional data for the year follow:

View the data.

Read the reguirements.

Data

a$.$ On January $1,2025,$ ARRC issued common stock for $$650,000.($Assume no par common stock.$)$

b$.$ Early in January, ARRC made the following cash payments:

For store fotures, $$47,000$

For merchandise inventory, $$250,000$

For rent expense on a store building, $$14,000$

c$.$ Later in the year, ARRC purchased merchandise inventory on account for $$245,000.$ Before year$-$end, ARRC paid $$165,000$ of this accounts payable.

d$.$ During $2025,$ ARRC sold $2,200$ units of merchandise inventory for $$600$ each. Belore year$-$end, the company collected $80\%$ of this amount. Cost of goods sold for the year was $$396,000,$ and ending merchandise inventory totaled $$99,000.$

e$.$ The store employs three people. The combined annual payroll is $$96,000,$ of which ARRC still owes $$2,000$ at year$-$end.

f$.$ At the end of the year, ARRC paid income tax of $$21,000.$ There are no income taxes payable.

g$.$ Late in $2025,$ ARRC paid cash dividends of $$39,000.$

h$.$ For store fixtures, ARRC uses the straight$-$line depreciation method, over five years, with zero residual value,

sh flows?

Requirements

What is the purpose of the statement of cash flows?

Prepare ARRC's income statement for the year ended December $31,2025,$ Use the single$-$step format, with all revenues listed together and all expenses listed together.

Prepare ARRC's balance sheet at December $31,2025.$

Prepare ARRC's statement of cash flows using the indirect method for the year ended December $31,2025.$