Vintage Motors, Inc., was formed on January 1, 2018. The following transactions occurred during 2018: On January 1, 2018, Vintage issued its common stock for $430,000. Early in January, Vintage made the following cash payments:

a. $160,000 for equipment

b. $234,000 for inventory (six cars at $39,000 each)

c. $18,000 for 2018 rent on a store building

In February, Vintage purchased four cars for inventory on account. The cost of this inventory was $192,000 ($48,000 per car). Before year-end, the company paid off $153,600 of this debt. The company uses the first-in, first-out (FIFO) method to account for its inventory.

During 2018, Vintage sold seven autos for a total of $504,000. Before year-end, it had collected 90% of this amount.

The business employs two people. The combined annual payroll is $60,000, of which Vintage owes $11,000 at year-end. At the end of the year, the company paid income taxes of $22,000. Late in 2018, Vintage declared and paid cash dividends of $13,000.

For equipment, Vintage uses the straight-line depreciation method, over five years, with zero residual value.

Requirements

1. Prepare Vintage’s income statement for the year ended December 31, 2018. Use the single-step format, with all revenues listed together and all expenses together.

2. Prepare Vintage’s balance sheet at December 31, 2018.

3. Prepare Vintage’s statement of cash flows for the year ended December 31, 2018. Format cash flows from operating activities using the indirect method.