Question

The following information was drawn from the Year 1 accounting records of Ozark Merchandisers: 1. Inventory that had cost $24,000 was sold for $45,600 under terms 2/20, net/30. 2. Customers returned merchandise to Ozark five days after the purchase. The merchandise had been sold for a price of $1,500. The merchandise had cost Ozark $1,000. 3. All customers paid their accounts within the discount period. 4. Selling and administrative expenses amounted to $4,560. 5. Interest expense paid amounted to $350. 6. Land that had cost $7,500 was sold for $9,000 cash. Required a. Determine the amount of net sales. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Net sales

Answer 1

Required a:

Gross sales	$45,600
(-) Sales return	($1,500)
(-) Sales discount [(45,600 - 1,500) * 2%]	($882)
Net sales	$43,218

Required b: Multi-step income statement

Net sales	$43,218
(-) Cost of goods sold (24,000 - 1,000)	($23,000)
Gross margin	$20,218
Operating expenses:
Selling and administrative expenses	($4,560)
Operating income	$15,658
Non-operating items:
Interest expenses	($350)
Gain on sale of land (9,000 - 7,500)	$1,500
Net income	$16,808

Required c:

Interest expenses would be shown in Operating activities in the statement of cashflow.

Required d:

The sale of land be shown as the full sales price of land, $9,000, would be shown as a cash inflow from investing activities on the statement of cash flows.