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 $174,500 on account. 3. Sold equipment for $205,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $130,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 5 percent of sales. 5. Paid the sales tax to the state agency on $155,500 of the sales. 6. On September 1, Year 1, borrowed $19,000 from the local bank. The note had a 6 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 $54,000 for the year. 9. Paid $124 300 of accounts payable. 10. Recorded accrued interest on the note issued in transaction no. 6. Required a. Show the effects of these transactions on the financial statements using a horizontal statements model. (Use a + to indicate increase or a - for decrease. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Columns for events that have no effect on any of the elements should be left blank.) (Note: Not all cells will require an input.) Event Assets - Liabilities Equity Revenue Expenses Net Income 1 + Statement of Cash Flows + FA 2 3b 4 5 6 7 8 9 10 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 $174,500 on account. 3. Sold equipment for $205,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $130,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 5 percent of sales 5. Paid the sales tax to the state agency on $155,500 of the sales. 6. On September 1. Year 1, borrowed $19,000 from the local bank. The note had a 6 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 $54,000 for the year. 9. Paid $124.300 of accounts payable. 10. Recorded accrued interest on the note issued in transaction no. 6. b-1. Prepare the income statement for Year 1. (Round your answers to the nearest dollar amount.) OZARK SALES Income Statement For the Year Ended December 31, Year 1 Expenses Total operating expenses 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 $174,500 on account 3. Sold equipment for $205,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $130,500. 4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 5 percent of sales. 5. Paid the sales tax to the state agency on S155,500 of the sales. 6. On September 1, Year 1, borrowed $19,000 from the local bank. The note had a 6 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 $54,000 for the year. 9. Paid $124,300 of accounts payable. 10. Recorded accrued interest on the note issued in transaction no. 6. c. What is the total amount of current liabilities at December 31, Year 12 (Round your answer to the nearest dollar amount.) Total current liabilities Old Town Entertainment has two employees in Year 1. Clay earns $4,300 per month and Philip, the manager, earns $10,600 per mont Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 20 percent for Philip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March b. Calculate the net pay for both Clay and Philip for December c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee? Complete this question by entering your answers in the tabs below. Reg A and B Reg C Reg D Calculate the net pay for both Clay and Philip for March. Calculate the net pay for both Clay and Philip for December (Do not round intermediate calculations and round your answers to 2 decimal places.) 5 Net Pay a Clay Philip b. Clay Phili Old Town Entertainment has two employees in Year 1. Clay earns $4,300 per month, and Philip, the manager, earns $10,600 per month. Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 15 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 20 percent for Philip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee? Complete this question by entering your answers in the tabs below. Reg A and B Reqc Reg D Is the net pay the same in March and December for both employees? Is the net pay the same in March and December for both employees? Old Town Entertainment has two employees in Year 1. Clay earns $4,300 per month and Philip, the manager, earns $10,600 per month Neither is paid extra for working overtime. Assume the Social Security tax rate is 6 percent on the first $110,000 of earnings and the Medicare tax rate is 1.5 percent on all earnings. The federal income tax withholding is 16 percent of gross earnings for Clay and 20 percent for Philip. Both Clay and Philip have been employed all year. Required a. Calculate the net pay for both Clay and Philip for March. b. Calculate the net pay for both Clay and Philip for December c. Is the net pay the same in March and December for both employees? d. What amounts will Old Town report on the Year 1 W-2s for each employee? Complete this question by entering your answers in the tabs below. Reg A and B Reg C Reg D What amounts will Old Town report on the Year 1 W-2s for each employee? (Do not round intermediate calculations.) Amount Appearing on W-2 for Year 1 Clay Box 1 Wages, tips, and other compensation Box 2 Federal income tax withheld Box 3 Social security wages Box 4 Social security tax withheld Box 5 Medicare wages and tips Box 6 Medicare tax withheld Phillip Box 1 Box 2 Box 3 Box 4 Box 5 Box 6 Wages, tips, and other compensation Federal income tax withheld Social security wages Social security tax withheld Medicare wages and tips Medicare tax withheld