(Learning Objective 2, 3: Preparing an income statement, balance sheet, and statement of cash flows—indirect method) Vintage Automobiles of Philadelphia, Inc., was formed on January 1, 20X8, when Vintage issued its common stock for $300,000. Early in January, Vintage made the following cash payments:

a. $150,000 for equipment

b. $120,000 for inventory (4 cars at $30,000 each)

c. $20,000 for 20X8 rent on a store building

In February, Vintage purchased 6 cars for inventory on account. Cost of this inventory was $260,000 ($43,333.33 each). Before year end, Vintage paid $208,000 of this debt. Vintage uses the FIFO method to account for inventory. During 20X8, Vintage sold 8 vintage autos for a total of $500,000. Before year end, Vintage collected 80% of this amount. The business employs 3 people. The combined annual payroll is $95,000, of which Vintage owes $4,000 at year end. At the end of the year, Vintage paid income tax of $10,000. Late in 20X8, Vintage declared and paid cash dividends of $11,000. For equipment, Vintage uses the straight-line depreciation method, over 5 years, with zero residual value.

Required

1. Prepare Vintage Automobiles of Philadelphia, Inc.’s, income statement for the year ended

December 31, 20X8. Use the single-step format, with all revenues listed together and all expenses together.

2. Prepare Vintage’s balance sheet at December 31, 20X8.

3. Prepare Vintage’s statement of cash flows for the year ended December 31, 20X8. Format cash flows from operating activities by using the indirect method.