(L.OBJ. 1, 2, 3) Purpose of the statement and preparing the Statement of Cash Flows—indi...

(L.OBJ. 1, 2, 3) Purpose of the statement and preparing the Statement of Cash Flows—indirect method [40—50 min)

Official Reserve Rare Coins (ORRC) was formed on January 1, 2010, when ORRC issued its common stock for $475,000. Additional data or the year follows:

Requirements

1. What is the purpose of the cash flow statement?

2. Prepare ORRC’s Income Statement for the year ended December 31, 2010. Use the single-step format, with all revenues listed together and all expenses together.

3. Prepare ORRC’s Balance Sheet at December 31, 2010.

4. Prepare ORRC’s Statement of Cash Flows using the indirect method for the year ended December 31, 2010.