Required information (The following information applies to the questions displayed below.] The following transactions apply to Ozark Sales for Year 1: 1. The business was started when the company received $48,500 from the issue of common stock. 2. Purchased merchandise inventory of $176,500 on account. 3. Sold merchandise for $201,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $126,000. 4. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. 5. Paid the sales tax to the state agency on $151,000 of the sales. 6. On September 1, Year 1, borrowed $20,000 from the local bank. The note had a 7 percent interest rate and matured on March 1, Year 2. 7. Paid $5,700 for warranty repairs during the year. 8. Paid operating expenses of $54,000 for the year. 9. Paid $125,300 of accounts payable. 10. Recorded accrued interest on the note issued in transaction number 6. Required a. Show the effect of these transactions on the financial statements using a horizontal statements model. The first transaction is recorded as an example. (Use + for increase, - for decrease, and leave blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or not affected (leave blank).) Horizontal Statements Model Balance Sheet Income Statement Event Assets Statement of Cash Flows Stockholders' Equity Liabilities Revenue Net Income - Expenses = + + + = + FA + 1 1. 2. 3a. 3b. 4. + + = + 5. + 6. = 1 7. + 8. 9. + 10. b1. Prepare the journal entries for the preceding transactions. b2. Post the transaction to the appropriate T-accounts. Complete this question by entering your answers in the tabs below. Req B1 Req B2 Prepare the journal entries for the preceding transactions. (Round your answers to the nearest dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet The business was started when the company received $48,500 from the issue of common stock. Record the transaction. Note: Enter debits before credits. Event General Journal Debit Credit 01 Record entry Clear entry View general journal ( Req B1 Req B2 > Req B1 Req B2 Post the transactions to the appropriate T-accounts. (Round your answers to the nearest dollar amount.) Cash Merchandise Inventory Beginning Balance Beginning Balance Ending Balance Ending Balance Accounts Payable Sales Tax Payable Beginning Balance Beginning Balance Ending Balance Ending Balance Warranties Payable Interest Payable Beginning Balance Beginning Balance Ending Balance Ending Balance Notes Payable Common Stock Beginning Balance Beg. Bal. Ending Balance Ending Balance Sales Revenue Cost of Goods Sold Beginning Balance Beginning Balance Ending Balance Ending Balance Operating expense Warranty Expense Beginning Balance Beginning Balance Ending Balance Ending Balance Interest Expense Beginning Balance Ending Balance
