The following information was drawn from the Year 1 accounting records of Ozark Merchandisers:

a. Inventory that had cost $17,400 was sold for $31,320 under terms 2/20, net/30.

b. Customers returned merchandise to Ozark five days after the purchase.

c. The merchandise had been sold for a price of $784.

d. The merchandise had cost Ozark $560.

e. All customers paid their accounts within the discount period.

f. Selling and administrative expenses amounted to $3,132.

g. Interest expense paid amounted to $240.

h. Land that had cost $6,400 was sold for $8,640 cash.

Required:

1. Determine the amount of net sales.

2. Prepare a multistep income statement.

Question

Business

Kendall Cook

23 July, 04:31

The following information was drawn from the Year 1 accounting records of Ozark Merchandisers:

a. Inventory that had cost $17,400 was sold for $31,320 under terms 2/20, net/30.

b. Customers returned merchandise to Ozark five days after the purchase.

c. The merchandise had been sold for a price of $784.

d. The merchandise had cost Ozark $560.

e. All customers paid their accounts within the discount period.

f. Selling and administrative expenses amounted to $3,132.

g. Interest expense paid amounted to $240.

h. Land that had cost $6,400 was sold for $8,640 cash.

Required:

1. Determine the amount of net sales.

2. Prepare a multistep income statement.

+1

Answers (1)

Know the Answer?

Indy · Answer 1

Answer and Explanation:

1. The computation of net sales is shown below:-

Net sales = Gross Sales - Sales Returns - Sales Discounts

= $31,320 - $784 - ($$31,320 - $784) * 2%)

= $31,320 - $784 - $610.72

= $29,925.28

2. The preparation of multistep income statement is shown below:-

Income Statement

Net sales revenue $29,925.28

Cost of Goods Sold $16,840

($17,400 - $560)

Gross Profit $13,085.28

Selling and Administrative

Expenses $3,132

Income from Operations $9,953.28

Other Income / Expense

Gain on sale of land $2,240

($8,640 - $6,400)

Interest Expense $240 $2,000

Net income $11,953.28