The following transactions apply to Ozark Sales for Year 1: 1. The business was started when the company received $48,000 from the issue of common stock. 2. Purchased merchandise inventory of $174,500 on account. 3. Sold merchandise for $190,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $115.500. 4. Provided a six-month warranty on the merchandise 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 $140,500 of the sales. 6. On September 1. Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2 7. Paid $5,500 for warranty repairs during the year. 8. Paid operating expenses of $53,000 for the year. 9. Paid $126,000 of accounts payable. 10. Recorded accrued interest on the note issued in transaction number 6.
The following transactions apply to Ozark Sales for Year 1: 1. The business was started when the company received $48,000 from the issue of common stock. 2. Purchased merchandise inventory of $174,500 on account. 3. Sold merchandise for $190,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $115.500. 4. Provided a six-month warranty on the merchandise 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 $140,500 of the sales. 6. On September 1. Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2 7. Paid $5,500 for warranty repairs during the year. 8. Paid operating expenses of $53,000 for the year. 9. Paid $126,000 of accounts payable. 10. Recorded accrued interest on the note issued in transaction number 6.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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![Required Information
Exercise 9-8A (Algo) 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 Year 1:
1. The business was started when the company received $48,000 from the issue of common stock.
2. Purchased merchandise inventory of $174,500 on account.
3. Sold merchandise for $190,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise
is sold. The merchandise had a cost of $115,500.
4. Provided a six-month warranty on the merchandise 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 $140,500 of the sales.
6. On September 1. Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on
March 1, Year 2
7. Paid $5,500 for warranty repairs during the year.
8. Paid operating expenses of $53,000 for the year.
9. Paid $126,000 of accounts payable.
10. Recorded accrued interest on the note issued in transaction number 6.
Exercise 9-8A (Algo) Part a
Required
a. Show the effect of these transactions on the financial statements using a horizontal statements model. The first transaction is
recorded as an example. (Use + for Increase, - for decrease, and leave blank for not affected. In the Statement of Cash Flows
column, Indicate whether the Item is an operating activity (OA), Investing activity (IA), financing activity (FA), or not affected (leave
blank).)
Horizontal Statements Model
Balance Sheet
Income Statement
Event
Assets
Liabilities
+
Stockholders'
Equity
Revenue
Expenses =
Net
Income
Statement of Cash
Flows
1.
=
+
FA
2.
+
3a.
=
+
=
3b.
=
+
=
4.
=
+
=
5.
+
6.
7.
8.
+
+
+
9.
10.
+](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F34522229-e598-4f2e-8d7a-d5c5e0098c8d%2Fb593ce94-5d07-444c-9fb3-1f5107c6ffd9%2F42gf0xv_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
Exercise 9-8A (Algo) 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 Year 1:
1. The business was started when the company received $48,000 from the issue of common stock.
2. Purchased merchandise inventory of $174,500 on account.
3. Sold merchandise for $190,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise
is sold. The merchandise had a cost of $115,500.
4. Provided a six-month warranty on the merchandise 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 $140,500 of the sales.
6. On September 1. Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on
March 1, Year 2
7. Paid $5,500 for warranty repairs during the year.
8. Paid operating expenses of $53,000 for the year.
9. Paid $126,000 of accounts payable.
10. Recorded accrued interest on the note issued in transaction number 6.
Exercise 9-8A (Algo) Part a
Required
a. Show the effect of these transactions on the financial statements using a horizontal statements model. The first transaction is
recorded as an example. (Use + for Increase, - for decrease, and leave blank for not affected. In the Statement of Cash Flows
column, Indicate whether the Item is an operating activity (OA), Investing activity (IA), financing activity (FA), or not affected (leave
blank).)
Horizontal Statements Model
Balance Sheet
Income Statement
Event
Assets
Liabilities
+
Stockholders'
Equity
Revenue
Expenses =
Net
Income
Statement of Cash
Flows
1.
=
+
FA
2.
+
3a.
=
+
=
3b.
=
+
=
4.
=
+
=
5.
+
6.
7.
8.
+
+
+
9.
10.
+
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