Question

The following information was drawn from the 2016 accounting records of Ozark Merchandisers: 1. Inventory that had cost $21,200 was sold for $39,900 under terms 2/20, net/30. 2. Customers returned merchandise to Ozark five days after the purchase. The merchandise had been sold for a price of $1,520. The merchandise had cost Ozark $920. 3. All customers paid their accounts within the discount period. 4. Selling and administrative expenses amounted to $4,200. 5. Interest expense paid amounted to $360. 6. Land that had cost $8,000 was sold for $9,250 cash. Determine the amount of net sales Prepare a multistep income statement.Where would the interest expense be shown on the statement of cash flows? a. Operating activitiesb. Investing activitiesc. Financing activities

Answer 1

Explanation:

Sales Discount = (Gross Sales - Sold Price) × Discount percentage

($39,900 - $1,520) × 2%

Net sales = Gross Sales - Sales Returns - Sales Discounts

= $39,900 - $1,520 - $767.60

= $37,612.40

Ozark Merchandisers Income Statement  

Net Sales Revenue                                     $37,612.40

Cost of Goods Sold ($21,200 - $920)        $20,280

Gross Profit                                                  $17,332.40

Selling and Administrative Expenses         $4,200

Income from Operations                             $13,132.40

Other Income  

Gain on sale of land                     $1,250  

Interest Expense                         ($360)         $890

Net Income                                                $14,022.40

Under Finance activities the interest expense is $360 in the statement of cash flow.