The following transactions apply to Ozark Sales for Year 1: The business was started when the company received $48,000 from the issue of common stock. Purchased equipment inventory of $176,000 on account. Sold equipment for $199,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $124,500. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. Paid the sales tax to the state agency on $149,500 of the sales. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2. Paid $5,500 for warranty repairs during the year. Paid operating expenses of $55,500 for the year. Paid $124,000 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6. b-1. Prepare the income statement for Year 1. Note: Round your answers to the nearest dollar amount. b-2. Prepare the balance sheet for Year 1. Note: Round your answers to the nearest dollar amount. b-3. Prepare the statement of cash flows for Year 1. Note: Enter amounts to be deducted and cash outflows with a minus sign. Round your answers to the nearest whole dollar.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter8: Current And Contingent Liabilities

Section: Chapter Questions

Problem 7MCQ

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The following transactions apply to Ozark Sales for Year 1:

The business was started when the company received $48,000 from the issue of common stock.
Purchased equipment inventory of $176,000 on account.
Sold equipment for $199,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $124,500.
Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales.
Paid the sales tax to the state agency on $149,500 of the sales.
On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2.
Paid $5,500 for warranty repairs during the year.
Paid operating expenses of $55,500 for the year.
Paid $124,000 of accounts payable.
Recorded accrued interest on the note issued in transaction no. 6.

b-1. Prepare the income statement for Year 1.

Note: Round your answers to the nearest dollar amount.

b-2. Prepare the balance sheet for Year 1.

Note: Round your answers to the nearest dollar amount.

b-3. Prepare the statement of cash flows for Year 1.

Note: Enter amounts to be deducted and cash outflows with a minus sign. Round your answers to the nearest whole dollar.

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