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 2016, Envoi sold eight vintage autos for a total of $600,000. Before year-end, Envoi collected 80% of this amount.

The business employs three people. The combined annual payroll is $55,000, of which Envoi owes $4,000 at year end. At the end of the year, Envoi paid income tax of $10,000.

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

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

Requirements

Prepare Envoi’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 Envoi’s balance sheet at December 31, 2016.

Prepare Envoi’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.

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 payments: a. $220,000 for equipment b. $243,000 for inventory (9 cars @ $27,000 each) c. $25,000 for 2016 rent on a store building. In February, Klaben purchased 3 cars for inventory on account. Cost for 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 2 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 residual value. Requirements: 1. Prepare Klaben’s income statement for the year ended December 31, 2016. Use the single-step format, with all the revenues listed together and all expenses listed 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 direct method.

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 payments: a. $220,000 for equipment b. $243,000 for inventory (9 cars @ $27,000 each) c. $25,000 for 2016 rent on a store building. In February, Klaben purchased 3 cars for inventory on account. Cost for 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 2 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 residual value. Requirements: 1. Prepare Klaben’s income statement for the year ended December 31, 2016. Use the single-step format, with all the revenues listed together and all expenses listed 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 direct method.

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 payments: a. $220,000 for equipment b. $243,000 for inventory (9 cars @ $27,000 each) c. $25,000 for 2016 rent on a store building. In February, Klaben purchased 3 cars for inventory on account. Cost for 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 2 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 residual value. Requirements: 1. Prepare Klaben’s income statement for the year ended December 31, 2016. Use the single-step format, with all the revenues listed together and all expenses listed 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.

Income Statement and Retained Earnings

The Huff Company presents the following partial list of account balances taken from its December 31, 2016 adjusted trial balance:

The following information is also available for 2016 and is not reflected in the preceding accounts:

The common stock has been outstanding all year. A cash dividend of $1.32 per share was declared and paid.

Land was sold at a pretax gain of $6700.

Division X (a major component of the company) was sold at a pretax gain of $4690. It had incurred a $9420 pretax operating loss during 2016.

A tornado, which is an unusual event in the area, caused a $5350 pretax loss.

The income tax rate on all items of income is 30%.

The average shareholders’ equity is $89000.

Required:

1. Prepare a 2016 multiple-step income statement for Huff. Round earnings per share computations to two decimal places.

2. Prepare a 2016 retained earnings statement.

3. Compute the 2016 return on common equity. Round to one decimal place.

%

Income Statement and Retained Earnings

The Huff Company presents the following partial list of account balances taken from its December 31, 2016 adjusted trial balance:

The following information is also available for 2016 and is not reflected in the preceding accounts:

The common stock has been outstanding all year. A cash dividend of $1.46 per share was declared and paid.

Land was sold at a pretax gain of $7,100.

Division X (a major component of the company) was sold at a pretax gain of $4,600. It had incurred a $9,430 pretax operating loss during 2016.

A tornado, which is an unusual event in the area, caused a $5,380 pretax loss.

The income tax rate on all items of income is 30%.

The average shareholders' equity is $90,000.

Required:

1. Prepare a 2016 multiple-step income statement for Huff. Round earnings per share computations to two decimal places.

2. Prepare a 2016 retained earnings statement.

3. Compute the 2016 return on common equity. Round to one decimal place.

%

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.

1. 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.
2. Prepare Classic’s balance sheet at December 31, 2016.
3. 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.
4. Comment on the business performance based on the statement of cash flows.

Calculate the monthly returns for 08/01/2015 – 08/31/2019 period for

(i) S&P 500: