Classic Automobiles of Huntsville Ltd. was formed on January 1, 2016 when Classic issued common shares...

Classic Automobiles of Huntsville Ltd. was formed on January 1, 2016 when Classic issued common shares for $300,000. Early in January 2016, Classic made the following cash payments:

$150,000 for equipment
$120,000 for inventory (four cars at $30,000 each)
$20,000 for 2016 rent on a store building

In February 2016, Classic purchased six cars for inventory on account. Cost of this inventory was $260,000 ($43,333.33 each). Before year-end, Classic paid $208,000 of this debt. Classic uses the FIFO method to account for inventory.

During 2016, Classic sold eight vintage autos for a total of $500,000. Before year-end, Classic collected 80% of this amount.

The business employs three people. The combined annual payroll is $95,000, of which Classic owes $4,000 at year end. At the end of the year, Classic paid income tax of $10,000.

Late in 2016, Classic declared and paid cash dividends of $11,000.

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

Prepare Classic Automobiles of Huntsville Ltd.’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.
Prepare Classic’s balance sheet at December 31, 2016.
Prepare Classic’s statement of cash flows for the year ended December 31, 2016. Format cash flows from operating activities by using the indirect method.
Comment on the business performance based on the statement of cash flows.

Solutions

Expert Solution

ekkarill92 answered 1 month ago

Next > < Previous

Related Solutions

Classic Automobiles of Huntsville Ltd. was formed on January 1, 2016 when Classic issued common shares...

Classic Automobiles of Huntsville Ltd. was formed on January 1, 2016 when Classic issued common shares for $300,000. Early in January 2016, Classic made the following cash payments: · $150,000 for equipment · $120,000 for inventory (four cars at $30,000 each) · $20,000 for 2016 rent on a store building In February 2016, Classic purchased six cars for inventory on account. Cost of this inventory was $240,000 ($40,000.00 each). Before year-end, Classic paid $200,000 of this debt. Classic uses the...

Classic Automobiles of Huntsville Ltd. was formed on January 1, 2016 when Classic issued common shares...

Envoi was formed on January 1, 2016, when Envoi issued common shares for $500,000. Early in...

Envoi was formed on January 1, 2016, when Envoi issued common shares for $500,000. Early in January 2016, Envoi made the following cash payments: $250,000 for equipment $200,000 for inventory (four cars at $50,000 each) $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. Envoi uses the FIFO method to account for inventory. During...

On January 1, 2016, A Corp. issued shares of its common stock to acquire all of...

On January 1, 2016, A Corp. issued shares of its common stock to acquire all of the outstanding common stock of B Inc. B’s book value was only $140,000 at the time, but A issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. A was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on B's records by $60,000 while equipment (five-year life) was undervalued...

A corporation was formed January 1, Year 1 when the firm issued 10,000 shares of its...

A corporation was formed January 1, Year 1 when the firm issued 10,000 shares of its $25 par value common stock for $350,000. On the same date the firm issued 1,000 shares of its 10% preferred shares for $100,000. The preferred shares have a par value of $100 per share. The preferred shares are cumulative and participating. The coporation had Net Income in Year 1 of $250,000. The firm declared and paid no dividends of any sort in Year 1....

PROBLEM 2 On January 1, 2016, Biden Corp. issued shares of its common stock to acquire...

PROBLEM 2 On January 1, 2016, Biden Corp. issued shares of its common stock to acquire all of the outstanding common stock of Raffie Inc. Raffie’s book value was only $140,000 at the time, but Biden issued 12,000 shares having a par value of $1 per share and a fair value of $20 per share. Biden was willing to convey these shares because it felt that buildings (ten-year life) were undervalued on Raffie's records by $60,000 while equipment (five-year life)...

On 1 January 2016, Jake Ltd had these equity accounts: Share Capital (50 000 shares issued...

On 1 January 2016, Jake Ltd had these equity accounts: Share Capital (50 000 shares issued for $20 each) $1 000 000 General Reserve 200 000 Retained Earnings 600 000 During the year, the following transactions occurred: Feb. 1 Declared an $0.80 cash dividend per share to shareholders, payable on 1 March. Mar. 1 Paid the dividend declared in February. July 1 Declared a 5% share dividend to shareholders, distributable on 31 July. On 1 July, the market price of...

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common...

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common stock valued at $16 a share for all of Founders, Inc.’s outstanding common shares. The fair value and book value of Founders’ identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2016, is as follows: Revolution Founders Cash $ 250,000 $ 180,000 Inventories $ 320,000.00 $ 600,000.00 Other Current Assets $ 600,000.00...

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common...

On January 2, 2016, Revolution Co. issued 150,000 new shares of its $1 par value common stock valued at $16 a share for all of Founders, Inc.’s outstanding common shares. The fair value and book value of Founders’ identifiable assets and liabilities were the same. Summarized balance sheet information for both companies just before the acquisition on January 2, 2016, is as follows: Revolution Founders Cash $ 250,000 $ 180,000 Inventories 320,000 600,000 Other Current Assets 600,000 400,000 Land 350,000...

a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The...

a) Liala Ltd acquired all the issued shares of Jordan Ltd on 1 January 2015. The following transactions occurred between the two entities:  On 1 June 2016, Liala Ltd sold inventory to Jordan Ltd for $12,000, this inventory previously costed Liala Ltd $10,000. By 30 June 2016, Jordan Ltd had sold 20% of this inventory to other entities for $3,000. The other 80% was all sold to external entities by 30 June 2017 for $13,000.  During the 2016–17...

Subjects