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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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