Question

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 Yeart: 1. The business was started when the company received $50,000 from the issue of common stock 2. Purchased equipment Inventory of $178.000 on account. 3. Sold equipment for $191,500 cash (not including sales tax) Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $116.500 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. Pald the sales tax to the state agency on $141.500 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 55.600 for warranty repairs during the year 8. Paid operating expenses of $53.500 for the year 9. Paid $125.100 of accounts payable 10. Recorded accrued Interest on the note issued in transaction no. 6

Answer 1

Event	Assets	=	Liabilities	+	Equity	Revenue	-	Expenses	=	Net Income	Statement of Cash Flows
1	+				+						+	FA
2	+		+
3a	+		+			+				+	+	OA
3b	-							+		-
4			+					+		-
5	-		-								-	OA
6	+		+								+	FA
7	-		-								-	OA
8	-							+		-	-	OA
9	-		-								-	OA
10			+					+		-

Explanation:

Event

Assets

=

Liabilities

+

Equity

Revenue

-

Expenses

=

Net Income

Statement of Cash Flows

1

Cash+

Common stock +

+

FA

2

Inventory+

Accounts payable+

3a

Cash+

Sales tax liability+

Sales revenue+

Net income+

+

OA

3b

Inventory-

Cost of goods sold+

Net income-

4

Warranty payable+

Warranty expense

Net income-

5

Cash-

Sales tax liability-

-

OA

6

Cash+

Notes payable+

+

FA

7

Cash-

Warranty payable-

-

OA

8

Cash-

Operating expenses+

Net income-

-

OA

9

Cash-

Accounts payable-

-

OA

10

Interest payable+

Interest expense+

Net income-