The following information was drawn from the year 1...

The following information was drawn from the Year 1 accounting records of Ozark Merchandisers: 1. Inventory that had cost $15,600 was sold for $23,400 under terms 2/10, net/30. 2. Customers returned merchandise to Ozark five days after the purchase. The merchandise had been sold for a price of $550. The merchandise had cost Ozark $440. 3. All customers paid their accounts within the discount period. 4. Selling and administrative expenses amounted to $2,340. 5. Interest expense paid amounted to $210. 6. Land that had cost $6,100 was sold for $7,320 cash. Required: A. Determine the amount of net sales. B. Prepare a multistep income statement. C. Where would the interest expense be shown on the statement of cash flows? 1. Operating activities. 2. Investing activities. 3. Financing activities. D. How would the sale of the land be shown on the statement of cash flows? 1. The full sales price of the land, $7,320, would be shown as a cash inflow from investing activities on the statement of cash flows.

Transcript

00:01 Okay, so i see that you need help with this question.

00:05 And in order to answer this, all of these here, because i know that you've read it, okay? so the following information was drawn from year one accounting records of ozark merchandisers.

00:18 So it wants you to determine the amount of net sales, prepare a multi -step income statement.

00:23 Where would the interest expense be shown on the statement of cash flows, operating activities, investment activities, financing activities, and how would the sale of land be shown on the statement of cash flows? the full price of the land is this much would be shown as cash flows from investing activities on the statement of cash flows.

00:44 Okay, so starting off, the first thing that you need to do is you need to determine the amount of net sales so you have initial sales is twenty three thousand four hundred dollars then you have customer returnable merchandise reducing the sales so returned merchandise and that is five hundred fifty dollars okay so so therefore, the net sales is $22 ,850 because you're going to take $23 ,400 and subtract the $550.

01:40 Then you need to calculate your sales discount.

01:45 The terms are 210 net 30, meaning that there is a 2 % discount.

02:00 Discount if they pay within 10 days.

02:08 So since all customers paid within the discount period, you're going to calculate the discount.

02:13 So 2 % of $22 ,850 is 0 .02 times $22 ,850, which is going to be $457.

02:29 Then you're going to subtract that from the net sales.

02:33 So so you're going to do $22 ,850 minus 457, and you're going to get $22 ,393.

02:49 Okay.

02:49 Then you're going to calculate the cost of goods sold, the initial inventory, initial inventory minus the returned merchandise.

03:13 So that is going to be cost of goods sold equals $15 ,600 minus $440.

03:31 And that is going to equal $15 ,160.

03:37 Then you are going to calculate your gross profit.

03:41 Your gross profit equals your final net sales minus your cost of goods sold so that's twenty two thousand three hundred ninety three minus fifteen thousand one hundred sixty dollars and and so that is going to equal $7 ,233.

04:13 Okay, that's your gross profit.

04:19 Okay, then you are going to calculate your operating income...

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