Modern Automobiles of Denver, Inc., was formed on January 1, 2012. The following transactions occurred during 2012 — issued its common stock for 280 000 Early made cash payments

Modern Automobiles of Denver, Inc., was formed on January 1, 2012. The following transactions occurred during 2012:

On January 1, 2012, Modern issued its common stock for $280,000. Early in January, Modern made the following cash payments:

a. $120,000 for equipment

b. $136,000 for inventory (four cars at $34,000 each)

c. $23,000 for 2012 rent on a store building

In February, Modern purchased nine cars for inventory on account. Cost of this inventory was $414,000 ($46,000 each). Before year-end, Modern paid $124,200 of this debt. Modern uses the FIFO method to account for inventory.

During 2012, Modern sold seven autos for a total of $490,000. Before year-end, Modern collected 90% of this amount.

The business employs four people. The combined annual payroll is $100,000, of which Modern owes $3,000 at year-end. At the end of the year, Modern paid income tax of $15,000.

Late in 2012, Modern declared and paid cash dividends of $16,000.

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

Requirements

1. Prepare Modern Automobiles of Denver, Inc.’s income statement for the year ended December 31, 2012. Use the single-step format, with all revenues listed together and all expenses together.