Reference no: EM132589455

Cruise Canada Motorhomes Inc. (CCM) was formed on January 1, 2017, when the company issued its common shares for $200,000. Early in January, CCM made the following cash payments:

a. For showroom fixtures, $50,000

b. For inventory, two motorhomes at $60,000 each, a total of $120,000

c. For rent on a store building, $12,000

• In February, CCM purchased three motorhomes on account. Cost of this inventory was $160,000 ($53,333.33 each). Before year-end, CCM paid $140,000 of this debt. CCM uses the FIFO method to account for inventory.
• During 2017, CCM sold four motorhomes for a total of $560,000. Before year-end, CCM collected 90% of this amount.
• The store employs three people. The combined annual payroll is $90,000, of which CCM owes $3,000 at year-end. At the end of the year, CCM paid income tax of $64,000.
• Late in 2017, CCM declared and paid cash dividends of $40,000.
• For showroom fixtures, CCM uses the straight-line depreciation method over five years with zero residual value.

Requirements

Question 1: Prepare CCM's income statement for the year ended December 31, 2017. Use the single-step format, with all revenues listed together and all expenses listed together.

Question 2: Prepare CCM's balance sheet at December 31, 2017.

Question 3: Prepare CCM's statement of cash flows for the year ended December 31, 2017. Format cash flows from operating activities by the indirect method.

Question 4: Comment on the business performance based on the statement of cash flows.