Problem 7 29 Accounting for short term debt and sales tax two accounting cycles LO 7 1, 7 2, 7 3, 7 4 The following transactions apply to Ocktoc Co for 2014, its first year of operations 1 Received $40,000 cash from the issue of a short term note with a 6 percent interest rate and a one year maturity The note was made on April 1, 2014 2 Received $122,000 cash plus applicable sales tax from performing services The services are subject to a sales tax rate of 7 percent 3 Paid $70,500 cash for other operating expenses during the year 4 Paid the sales tax due on $102,000 of the service revenue for the year Sales tax on the balance of the revenue is not due until 2015 5 Recognized the accrued interest at December 31, 2014 The following transactions apply to Ocktoc Co for 2015 1 Paid the balance of the sales tax due for 2015 2 Received $147,000 cash plus applicable sales tax from performing services The services are subject to a sales tax rate of 7 percent 3 Repaid the principal of the note and applicable interest on April 1, 2015 4 Paid $83,500 of other operating expenses during the year 5 Paid the sales tax due on $122,000 of the service revenue The sales tax on the balance of the revenue is not due until 2016 Required a Organize the transaction data in accounts under an accounting equation (Do not round intermediate calculations and round your answers to the nearest whole dollar amount Enter any decreases to account balances with a minus sign Select NA if there is no effect on the Accounts Titles for Retained Earnings ) b 1 Prepare the income statement for 2014 and 2015 (Do not round intermediate calculations and round your answers to the nearest whole dollar amount ) b 2 Prepare the statement of changes in stockholders equity for 2014 and 2015 (Do not round intermediate calculations and round your answers to the nearest whole dollar amount ) b 3 Prepare the balance sheet for 2014 and 2015 (Do not round intermediate calculations and round your answers to the nearest whole dollar amount ) b 4 Prepare the statement of cash flows for each year (Do not round intermediate calculations and round your answers to the nearest whole dollar amount Amounts to be deducted should be indicated with a minus sign )

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Problem 7-29 Accounting for short-term debt and sales tax-two accounting cycles LO 7-1, 7-2, 7-3, 7-4

The following transactions apply to Ocktoc Co. for 2014, its first year of operations:

1.	Received $40,000 cash from the issue of a short-term note with a 6 percent interest rate and a one-year maturity. The note was made on April 1, 2014.
2.	Received $122,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.
3.	Paid $70,500 cash for other operating expenses during the year.
4.	Paid the sales tax due on $102,000 of the service revenue for the year. Sales tax on the balance of the revenue is not due until 2015.
5.	Recognized the accrued interest at December 31, 2014.

The following transactions apply to Ocktoc Co. for 2015:

1.	Paid the balance of the sales tax due for 2015.
2.	Received $147,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 7 percent.
3.	Repaid the principal of the note and applicable interest on April 1, 2015.
4.	Paid $83,500 of other operating expenses during the year.
5.	Paid the sales tax due on $122,000 of the service revenue. The sales tax on the balance of the revenue is not due until 2016.

Required

a.	Organize the transaction data in accounts under an accounting equation. (Do not round intermediate calculations and round your answers to the nearest whole dollar amount. Enter any decreases to account balances with a minus sign. Select "NA" if there is no effect on the "Accounts Titles for Retained Earnings".)

b-1.	Prepare the income statement for 2014 and 2015. (Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)

b-2.	Prepare the statement of changes in stockholders equity for 2014 and 2015. (Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)

b-3.	Prepare the balance sheet for 2014 and 2015. (Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)

b-4.	Prepare the statement of cash flows for each year. (Do not round intermediate calculations and round your answers to the nearest whole dollar amount. Amounts to be deducted should be indicated with a minus sign.)