The following transactions apply to Ozark Sales for Year 1: The business was started when the company received $48,000 from the issue of common stock. Purchased equipment inventory of $175,500 on account. Sold equipment for $193,500 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $118,500. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. Paid the sales tax to the state agency on $143,500 of the sales. On September 1, Year 1, borrowed $20,000 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2. Paid $5,500 for warranty repairs during the year. Paid operating expenses of $54,000 for the year. Paid $124,400 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6.
The following transactions apply to Ozark Sales for Year 1: The business was started when the company received $48,000 from the issue of common stock. Purchased equipment inventory of $175,500 on account. Sold equipment for $193,500 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $118,500. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales. Paid the sales tax to the state agency on $143,500 of the sales. On September 1, Year 1, borrowed $20,000 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2. Paid $5,500 for warranty repairs during the year. Paid operating expenses of $54,000 for the year. Paid $124,400 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6.
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter7: Receivables And Investments
Section: Chapter Questions
Problem 7.19MCE
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Question
The following transactions apply to Ozark Sales for Year 1:
- The business was started when the company received $48,000 from the issue of common stock.
- Purchased equipment inventory of $175,500 on account.
- Sold equipment for $193,500 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $118,500.
- Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 4 percent of sales.
- Paid the sales tax to the state agency on $143,500 of the sales.
- On September 1, Year 1, borrowed $20,000 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2.
- Paid $5,500 for warranty repairs during the year.
- Paid operating expenses of $54,000 for the year.
- Paid $124,400 of accounts payable.
- Recorded accrued interest on the note issued in transaction no. 6.
Required
- Record the given transactions in a horizontal statements model.
- Prepare the income statement, balance sheet, and statement of
cash flows for Year 1. - What is the total amount of current liabilities at December 31, Year 1?
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