Question

Exercise 4-15A Sales returns, discounts, gain, and a multistep income statement LO 4-2,4-3, 4-6 The following information was drawn from the Year 1 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. Required a. Determine the amount of net sales. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) Net sales

Answer 1

Requirement a:

Answer: $37,612

Calculations:

Sales revenue	$39,900
Sales returns and allowance	($1,520)
Sales discount [(39900 sales -1520 returns) x 2%]	($768)
Net sales	$37,612

Requirement b:

OZARK MERCHANDISES
Income Statement
For the year ended December 31, Year 1
Net sales	$37,612
Cost of goods sold [$21,200 - $920 cost of returns]	($20,280)
Gross profit	$17,332
Operating expenses:
Selling and administrative expenses	($4,200)
Income from operations	$13,132
Non-Operating items:
Interest expense	($360)
Gain on sale of land [9250-8000]	$1,250
Net income	$14,022

Requirement c:

Answer: Operating activities

Requirement d:

Answer: The full sales price of the land, $9,250, would be shown as a cash inflow from investing activities on the statement of cash flows