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 merchandise inventory of $176,000 on account.Sold merchandise for $202,000 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $127,000.Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales.Paid the sales tax to the state agency on $152,000 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 $6,000 for warranty repairs during the year.Paid operating expenses of $55,500 for the year.Paid $124,300 of accounts payable.Recorded accrued interest on the note issued in transaction number 6. b1. Prepare the journal entries for the preceding transactions.b2. Post the transaction to the appropriate T-accounts.

Journal Entries are prepared by the organizations to record the transactions which are occurring in…

Answered: The following transactions apply to…

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

See similar textbooks

Related questions

Question

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 merchandise inventory of $176,000 on account.
Sold merchandise for $202,000 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $127,000.
Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales.
Paid the sales tax to the state agency on $152,000 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 $6,000 for warranty repairs during the year.
Paid operating expenses of $55,500 for the year.
Paid $124,300 of accounts payable.
Recorded accrued interest on the note issued in transaction number 6.

b1. Prepare the journal entries for the preceding transactions.
b2. Post the transaction to the appropriate T-accounts.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.