Classic Reserve Rare Coins (CRRC) was formed on January 1, 2012. Additional data for the year follows:
(a) On January 1, 2012, CRRC issued common stock for $425,000.
(b) Early in January, CRRC made the following cash payments:
1. For store fixtures, $54,000.
2. For inventory, $270,000.
3. For rent expense on a store building, $10,000.
(c) Later in the year, CRRC purchased inventory on account for $243,000. Before year-end, CRRC paid $163,000 of this account payable.
(d) During 2012, CRRC sold 2,100 units of inventory for $350 each. Before year-end, the company collected 80% of this amount. Cost of goods sold for the year was $260,000, and ending inventory totaled $253,000.
(e) The store employs three people. The combined annual payroll is $94,000, of which CRRC still owes $4,000 at year-end.
(f) At the end of the year, CRRC paid income tax of $23,000.
(g) Late in 2012, CRRC paid cash dividends of $41,000.
(h) For equipment, CRRC uses the straight-line depreciation method, over five years, with zero residual value.
1. What is the purpose of the cash flow statement?
2. Prepare CRRC’s income statement for the year ended December 31, 2012. Use the single-step format, with all revenues listed together and all expenses listed together.
3. Prepare CRRC’s balance sheet at December 31, 2012.
4. Prepare CRRC’s statement of cash flows using the indirect method for the year ended December 31, 2012.
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