Response to the following problem:
Dohn Corporation, a discounter of men's suits, was formed on January 1, 20X6, when Dohn issued its common stock for $200,000. Early in January, Dohn made the following cash payments:
a. For store fixtures, $50,000
b. For inventory (1,000 men's suits), $100,000
c. For rent on a store building, $10,000
Later in the year, Dohn purchased 2,000 men's suits on account. Cost of each suit was $120, for a total of $240,000. Before year-end, Dohn paid $140,000 of this account payable. Dohn uses the FIFO method to account for inventory.
During 20X6, Dohn sold 2,500 units of inventory for $200 each. Before year-end, Dohn collected 90% of this amount.
The store employs three people. The combined annual payroll is $90,000, of which Dohn owes $5,000 at year-end. At the end of the year, Dohn paid income tax of $30,000.
Late in 20X6, Dohn declared and paid cash dividends of $40,000.
For equipment, Dohn uses the straight-line depreciation method, over 5 years, with zero residual value.
Required:
1. Prepare Dohn Corporation's income statement for the year ended December 31, 20X6. Use the single-step format, with all revenues listed together and all expenses together.
2. Prepare Dohn's balance sheet at December 31, 20X6.
3. Prepare Dohn's statement of cash flows for the year ended December 31, 20X6. Format cash flows from operating activities by the indirect method.