Question

Exercise 7-21 Current liabilities LO 7-1, 7-2, 7-4, 7-10 [The following information applies to the questions displayed below.] The following transactions apply to Ozark Sales for 2018: The business was started when the company received $48,500 from the issue of common stock. Purchased equipment inventory of $177,500 on account. Sold equipment for $193,500 cash (not including sales tax). Sales tax of 6 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 3 percent of sales. Paid the sales tax to the state agency on $143,500 of the sales. On September 1, 2018, borrowed $19,500 from the local bank. The note had a 6 percent interest rate and matured on March 1, 2019. Paid $5,900 for warranty repairs during the year. Paid operating expenses of $52,500 for the year. Paid $124,500 of accounts payable. Recorded accrued interest on the note issued in transaction no. 6. Exercise 7-21 Part a Required Record the given transactions in a horizontal statements model like the following one. (Enter any decreases to account balances and cash outflows with a minus sign. "In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and NA for not affected. Do not round intermediate calculations and round your answers to the nearest whole dollar amount.)

Answer 1

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	Assets		=	Liabilities+					Equity		Income Statement
Event	Cash+	Inventory	=	Accounts Payable	Sales Tax Payable	Warranty Payable	Interest Payable	Note Payable	Common Stock+	Retained Earning	Revenue-	Expense	Net Income	Cash Flow
1	48500								48500					48500	Financing
2		177500		177500
3	205110				11610					193500	193500		193500	205110	Operating
3		-118500								-118500		118500	-118500
4						5805				-5805		5805	-5805
5	-8610				-8610									-8610	Operating
6	19500							19500						19500	Operating
7	-5900					-5900								-5900	Operating
8	-52500									-52500		52500	-52500	-52500	Operating
9	-124500			-124500										-124500	Operating
10							390			-390		390	-390
Total	81600	59000		53000	3000	-95	390	19500	48500	16305	193500	177195	16305	81600