Klaben Motors, Inc., was formed on January 1, 2016. The following transactions occurred during 2016: On January

Question:

Klaben Motors, Inc., was formed on January 1, 2016. The following transactions occurred during 2016:
On January 1, 2016, Klaben issued its common stock for $510,000. Early in January, Klaben made the following cash payments:
a. $220,000 for equipment
b. $243,000 for inventory (nine cars at $27,000 each)
c. $25,000 for 2016 rent on a store building
In February, Klaben purchased three cars for inventory on account. Cost of this inventory was $ 117.000 ($39,000 each). Before year-end, Klaben paid $70,200 of this debt. The company uses the first-in, first-out (FIFO) method to account for inventory.
During 2016, Klaben sold 11 autos for a total of $649,000. Before year-end, it had collected 80% of this amount.
The business employs two people. The combined annual payroll is $151,000, of which Klaben owes $1,000 at year-end. At the end of the year, Klaben paid income tax of $22,000. Late in 2016, Klaben declared and paid cash dividends of $ 11,000.
For equipment, Klaben uses the straight-line depreciation method, over five years, with zero residual value.
Requirements
1. Prepare Klaben Motors, Inc.'s, income statement for the year ended December 31, 2016. Use the single-step format, with all revenues listed together and all expenses together.
2. Prepare Klaben's balance sheet at December 31, 2016.
3. Prepare Klaben's statement of cash flows for the year ended December 31, 2016. Format cash flows from operating activities by using the indirect method.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-0134127620

11th edition

Authors: Walter Harrison, Charles Horngren, William Thomas, Wendy Tietz

Question Posted: