Question 3 (25 marks) Envol was formed on January 1, 2016, when Erol issued common shares for $500,000. Early in January 2016, Envoi made the following cash payments: a $250,000 for equipment b. $200,000 for inventory (four cars at $50,000 each) e $10,000 for 2016 rent on a store building In February 2016, Envoi purchased six cars for inventory on account. Cost of this inventory was $260,000 ($43,333.33 each). Before year-end, Envoi paid $208,000 of this debt. Envol uses the FIFO method to account for inventory During 2016, Envoi sold eight vintage autos for a total of $600,000. Before year end, Envoi collected 80% of this amount. The business employs three people. The combined annual payroll is $55,000, of which Envoi owes $4,000 at year end. At the end of the year, Envoi paid income tax of $10,000, Late in 2016, Envoi declared and paid cash dividends of $11,000. For equipment, Envoi uses the straight-line depreciation method over five years with zero residual value. Requirements 1. Prepare Envoi's income statement for the year ended December 31, 2016. Use the single- step format, with all revenues listed together and all expenses listed together. 2. Prepare Envoi's balance sheet at December 31, 2016. 3.Prepare Envoi's statement of cash flows for the year ended December 31, 2016. Format cash flows from operating activities by using the indirect method. 1 Comment on the hueincee norformanra hacerl on the statement of rach flowe