The following transactions apply to Ozark Sales for Year 1
Required information Exercise 9-8A Current liabilities LO 9-1, 9-2, 9-4 [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 equipment inventory of $177,000 on account 3. Sold equipment for $196,500 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $121,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 3 percent of sales. 5. Paid the sales tax to the state agency on $146,500 of the sales. 6. On September 1, Year 1, borrowed $20,500 from the local bank. The note had a 7 percent interest rate and matured on March 1, Year 2. 7. Paid $5,600 for warranty repairs during the year. 8. Paid operating expenses of $52,500 for the year. 9. Paid $124,500 of accounts payable. 10. Recorded accrued interest on the note issued in transaction no. 6. Exercise 9-8A Part b b-1. Prepare the income statement for Year 1. (Round your answers to the near Answer is not complete. OZARK SALES Income Statement For the Year Ended December 31, Year 1 $ Sales revenue 196,500 121,500 75,000 Cost of goods sold Gross margin Expenses Warranty expense Other operating expenses 52,500 Total operating expenses Operating income Interest expense 52,500 22,500 5,895 Net income $ 16,605 Required information b-2. Prepare the balance sheet for Year 1. (Round your answers to t Answer is not complete. OZARK SALES Balance Sheet As of December 31, Year 1 Assets Cash Merchandise inventory $ 86,900 55,500 Total assets $ 142,400 Liabilities Accounts payable Sales tax payable Notes payable Warranty payable Interest payable $ 52,500 4,000 20,500 5,895 X 478 83.373 Total liabilities Stockholders' equity Common stock Retained earnings $ 48,500 Total stockholders' equity Total liabilities and stockholders' equity 48,500 $ 131,873 b-3. Prepare the statement of cash flows for Year 1. (Amounts to be Round your answers to the nearest dollar amount.) X Answer is complete but not entirely correct. OZARK SALES Statement of Cash Flows For the Year Ended December 31, Year 1 Cash flow from operating activities: Inflow from customers $ 196,500 Outflow to purchase inventory (124,500) Outflow for sales tax (11,720) Outflow for expenses (52,500) Inflow from sales tax 15,720 $ 23,500 Net cash flow from operating activities Cash flows from investing activities: Cash flows from financing activities Inflow from stock issue Inflow from loan $ 48,500 20,500 Net cash flows from financing activities Net change in cash Plus: Beginning cash balance Ending cash balance 69,000 92,500 0 $ 92,500
