Answer and Explanation:
The preparation of the income statement for 2016 is shown below:-
OZARK SALES
Income Statement
For the Year Ended December 31, 2016
Sales revenue $510,000
Cost of goods sold $330,000
Gross margin $180,000
Expenses
Operating expenses $78,000
Warranty expenses $10,200
Total operating expenses $88,200
Operating income $91800
Interest expense $667
Net income $91133
b. The preparation of balance sheet for 2016 is shown below:-
OZARK SALES
Balance Sheet
As of December 31, 2016
Assets
Cash $284,600
Merchandise inventory $50,000
Total assets $334,600
Liabilities
Accounts payable $130,000
Sales tax payable $8,800
Notes payable $50,000
Warranties payable $4,000
Interest payable $667
Total liabilities $193,467
Here, we added all liabilities to reach the total liabilities
Stockholders' equity
Common stock $50,000
Retained earnings $91,133
Total stockholders' equity $14,1133
Total liabilities and stockholders'
equity $334,600
c. The Preparation of statement of cash flow is shown below:-
OZARK SALES
Statement of Cash Flows
For the Year Ended December 31, 2016
Cash flows from operating activities:
Inflow from customers $510,000
Inflow from sales tax $40,800
Outflow for expenses -$84,200
Outflow for sales tax -$32,000
Outflow to purchase inventory -$250000
Net cash flow from operating activities $184,600
Cash flows from investing activities
Cash flows from financing activities:
Inflow from loan $50,000
Inflow from stock issue $50,000
Net cash flows from financing activities $100,000
Net change in cash $284,600
Plus: Beginning cash balance 0
Ending cash balance $284,600
