Official Reserve Rare Coins (ORRC) was formed on January 1, 2016. Additional data for the year follow:
a. On January 1, 2016, ORRC issued no par common stock for $450,000.
b. Early in January, ORRC made the following cash payments:
1. For store fixtures, $49,000
2. For merchandise inventory, $280,000
3. For rent expense on a store building, $10,000
c. Later in the year, ORRC purchased merchandise inventory on account for $238,000. Before year-end, ORRC paid $158,000 of this accounts payable.
d. During 2016, ORRC sold 2,900 units of merchandise inventory for $200 each. Before year-end, the company collected 80% of this amount. Cost of goods sold for the year was $340,000, and ending merchandise inventory totaled $178,000.
e. The store employs three people. The combined annual payroll is $88,000, of which ORRC still owes $5,000 at year-end.
f. At the end of the year, ORRC paid income tax of $17,000. There was no income taxes payable.
g. Late in 2016, ORRC paid cash dividends of $38,000.
h. For store fixtures, ORRC uses the straight-line depreciation method, over five years, with zero residual value.
Requirements
1. Prepare ORRC’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 ORRC’s balance sheet at December 31, 2016.
3. Prepare ORRC’s statement of cash flows for the year ended December 31, 2016. Format cash flows from operating activities by the direct method.