Vail Book Mart sells books and other supplies to students in a state where the sales tax rate is 6 percent. Vail Book Mart engaged in the following transactions for Year 1. Sales tax of 6 percent is collected on all sales.Book sales, not including sales tax, for Year 1 amounted to $279,000 cash.Cash sales of miscellaneous items in Year 1 were $151,000, not including tax.Cost of gods sold was $211,000 for the year.Paid $130,000 in operating expenses for the year.Paid the sales tax collected to the state agency.RequiredWhat is the total amount of sales tax Vail Book Mart collected and paid for the year?Prepare the journal entries for the preceding transactions.What is Vail Book Mart's net income for the year? **Support for Students through Entrepreneurship: A Case Study**### BackgroundTo support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for \$270,000 and sold them for \$380,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3 percent of sales. During the year, she paid \$4,120 cash to replace a defective tuner.### Required Tasksa. Prepare an income statement and statement of cash flows for Daun's first year of operation. b. Based on the information given, what is Daun’s total warranty liability at the end of the accounting period?### InstructionsComplete this question by entering your answers in the tabs below.#### Task Req A1: Income Statement & Cash Flow**Prepare a statement of cash flows for Daun’s first year of operation.**(Enter cash outflows and amounts to be deducted with a minus sign.)**DAUN'S STEREOS****Statement of Cash Flows**- **Cash flows from operating activities:** - [Space for specific cash inflows] - [Space for specific cash outflows] - [Additional items] - [Net cash flow from operating activities] $_________- **Cash flows from investing activities:** - [Space for specific cash inflows] - [Space for specific cash outflows]- **Cash flows from financing activities:** - [Space for specific cash inflows] - [Space for specific cash outflows]- **Net change in cash:** $_________- **Ending cash balance:** $_________#### Task Req A2: Additional Calculations_[This part would include any additional calculations necessary to create the complete financial statements, including detailed itemized entries as needed.]_#### Task Req B: Warranty Liability Calculation_[Clear explanation of the process to determine the total warranty liability by considering the estimated percentage of sales and the warranty claims paid out during the year.]_---**Educational Notes:**This case study is designed to provide practical experience in preparing financial statements and understanding the implications of warranties on business operations. It offers insights into:1. **Revenue and Cost Analysis:** Understanding how initial costs and sales revenues impact the overall profitability.2. **Cash Flow Management:** Learning the importance of ---### Supporting Business Ventures in Education: Case Study of Daun Deloch**Introduction:**To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $270,000 and sold them for $380,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 3 percent of sales. During the year, she paid $4,120 cash to replace a defective tuner.**Required Tasks:**1. Prepare an income statement and statement of cash flows for Daun's first year of operation.2. Based on the information given, what is Daun's total warranties liability at the end of the accounting period?**Instructions:**Complete this question by entering your answers in the tabs below.**Prepare an income statement for Daun’s first year of operation:**#### DAUN'S STEREOS**Income Statement**| Revenues | Amount ||-------------------|---------|| Sales Revenue | || Total Revenues | $380,000| | Expenses | Amount ||-------------------|---------|| Cost of Goods Sold (COGS)| $270,000 || Warranty Expense | || Total Expenses | || Net Income | Amount ||-------------------|---------|| | |**Pre-requisites:**- Click on "Req A1" to prepare the income statement.- Click on "Req A2" to prepare the statement of cash flows.- Click on "Req B" to calculate the total warranties liability.**Graphical Explanation:**- The provided interactive table has sections for revenue, expenses, and net income, reflecting typical financial reporting structure.- The tabs (Req A1, Req A2, Req B) help break down the preparation process into manageable tasks for generating accurate financial statements.---This structured case study allows students to understand practical applications of income statement preparation and warranty liability calculations, fundamental skills in business and finance education.

Income Statement -An income Statement is a financial statement that includes Revenue earned and…

Answered: To support herself while attending…

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q