Question

Required information [The following information applies to the questions displayed below.] The following transactions apply to Ozark Sales for 2018: 1. The business was started when the company received $49,500 from the issue of common stock. 2 Purchased equipment Inventory of $174.500 on account. 3. Sold equipment for $199,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $124.500. 4. Provided a six-month warranty on the equipment 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 $149,500 of the sales. 6. On September 1, 2018, borrowed $21.000 from the local bank. The note had a 6 percent Interest rate and matured on March 1, 2019. 7. Paid $5.800 for warranty repairs during the year. 8. Pald operating expenses of $54,000 for the year. 9. Paid $125.500 of accounts payable. 10. Recorded accrued Interest on the note issued in transaction no. 6. b. Prepare the income statement, balance sheet, and statement of cash flows for 2018.

Answer 1

Requirement | Income Statement Ozark Sales Income Statement For the Year Ended December 31, 2018 Particulars $ Sales Revenue Cost of Goods Sold Gross Margin $ $ $ $ 199,500 124,500 75,000 Less : Expenses - Operating Expenses - Warranty Expenses Total Operating Expenses $ $ 54,000 7,980 $ 61,980 Operating Income Less : Interest Expense Net Income $ $ $ 13,020 (420) 12,600

Requirement Balance Sheet Ozark Sales Balance Sheet December 31, 2018 Particulars Assets Cash Merchandise Inventory Total Assets $ $ $ $ $ 88,200 50,000 138,200 $ Liabilities Accounts Payable Sales Tax Payable Notes Payable Warranty Payable Interest Payable Total Liabilities A A A A A 49,000 3,500 21,000 2,180 420 $ $ $ 76,100 Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity $ $ 49,500 12,600 $ 62,100 Total Liabilities and Stockholders' Equity $ 138,200

$ Requirement Statement of Cash Flows Ozark Sales Statement of Cash Flows For the Year Ended December 31, 2018 Particulars $ Cash Flow from Operating Activities : - Inflow from Customers $ 199,500 - Inflow from Sales Tax $ 13,965 - Outflow of Expenses $ (59,800) - Outflow of Sales Tax $ (10,465) - Outflow for Inventory Purchases $ (125,500) Net Cash Flow from Operating Activities $ 17,700 Cash Flow from Investing Activities Cash Flow from Financing Activities : - Inflow from Loan - Inflow from Stock Issue Net Cash Flow from Financing Activities $ $ 21,000 49,500 $ 70,500 88,200 Net Cash in Cash Add : Beginning Cash Balance Ending Cash Balance $ $ $ 88,200

Credit Working Note Journal Entries Particulars Cash Common Stock Debit 49,500 $ $ 49,500 $ 174,500 Merchandise Inventory Accounts Payable $ 174,500 $ 213,465 Cash Sales Revenue Sales Tax Payable AA $ $ 199,500 13,965 $ 124,500 Cost of Goods Sold Merchandise Inventory $ 124,500 $ 7,980 Warranty Expense Warranty Payable $ 7,980 $ 10,465 Sales Tax Payable Cash $ $ 10,465 $ 21,000 Cash Notes Payable $ 21,000 Warranty Payable $ 5,800 Cash 5,800 $ 54,000 Operating Expense Cash $ 54,000 $ $ 125,500 Accounts Payable Cash $ $ 125,500 $ 420 Interest Expense Interest Payable $ 420