Question

On January​ 1,2016​, Retro issued its common stock for $575,000. Early in​ January, Retro made the following cash​ payments:

a. $200,000 for equipment

b. $324,000 for inventory ​(nine cars at $36,000 ​each)

c. $24,000 for 2016 rent on a store building

In​ February, Retro purchased four cars for inventory on account. Cost of this inventory was $192,000 ($48,000 each). Before​ year-end, Retro

paid $115,200 of this debt. The company uses the​ first-in, first-out​ (FIFO) method to account for inventory. During 2016​, Retro sold 10

autos for a total of $650,000.

Before​ year-end, it had collected 90​% of this amount. The business employs

six people. The combined annual payroll is $150,000​, of which Retro

owes $5,000 at​ year-end. At the end of the​ year, Retro

paid income tax of $13,000. Late in 2016​, Retro declared and paid cash dividends of $14,000. For​ equipment, Retro uses the​ straight-line depreciation​ method, over five​ years, with zero residual value.

Requirement 1. Prepare

RetroRetro​'s

income statement for the year ended December​ 31,

20162016.

Use the​ single-step format, with all revenues listed together and all expenses together.

		Retro Motors, Inc.
		Income Statement
		Year Ended December 31, 2016
	Revenue:
	Expenses:

Requirement 2. Prepare

RetroRetro​'s

balance sheet at December​ 31,

20162016.

Retro Motors, Inc.
Balance Sheet
December 31, 2016
Assets					Liabilities
Current assets:					Current liabilities:
					Stockholders' equity
Property, plant, and equipment:
Less:

Requirement 3. Prepare

RetroRetro​'s

statement of cash flows for the year ended December​ 31,

20162016.

Format cash flows from operating activities by using the direct method. ​(Use parentheses or a minus sign for numbers to be subtracted and for a net decrease in cash. Enter​ "0" for zero​ balances.)

	Retro Motors, Inc.
	Statement of Cash Flows (Direct Method)
	Year Ended December 31, 2016
	Cash flows from operating activities:
	Cash payments:
	Total cash payments
	Net cash provided by (used for) operating activities

	Cash flows from investing activities:
	Net cash provided by (used for) investing activities

	Cash flows from financing activities:
	Net cash provided by (used for) financing activities

	Net increase (decrease) in cash

Choose from any list or enter any number in the input fields and then continue to the next question.

Answer 1