Answer :
1. A. Operating activities.
2. The sale price of the land should be shown in the investing activities
$25,813.20
Explanation :
As per the data given in the question,
The interest expense is reported in the operating activities section of the cash flow statement
Net sales = Gross sales - Sale returns - Sales discounts
=$27,000 - $660 - $526.80
= $25,813.20
The sales discount is come from
= ($27,000 - $660) × 2%
= $526.80
The preparation of the multi step income statement is presented below:
Ozark Merchandisers
Income Statement
Net sales revenue $25,813.20
Less: Cost of goods sold ($15,000 - $400) $14,600
Gross profit $11,213.20
Less: expenses
Selling and administrative expense $2,835
Income from operations $8,378.2
Add: Gain on sale of land $900 ($6,900 - $6,000)
Less: Interest expense $200
Net income $9,078.20
The sale price of the land i.e $6,900 should be shown in the investing activities as it reflects the cash inflow position
This is the answer and the given options are incorrect
