Ing Tor Merchandising 4-14A Sales returns, iscounts, gain, and a multistep incom
ID: 2426305 • Letter: I
Question
Ing Tor Merchandising 4-14A Sales returns, iscounts, gain, and a multistep income statement
The following information •as drmvn from the 2016 accounting records of Ozark Merchandisers:
1- Inventory that had cost S21.2(X) 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 SIS20- The merchandise had cost Ozark $920.
3- All customers paid their accounts within the discount period.
4- Selling and administrati'.e expenses amounted to $4,200. Interest expense paid amounted to S360.
6. Land that had cost S8.OOO was sold for S9,250 cash.
Required
a.Determine the amount of net sales
b.Prepare a multistep income statement.
c. Where would the interest be shown on the statement of cash flows?
d. How would the sale of the land be shown on the statement of cash flows?
e. Explain the difference between a gain and revenue.
Explanation / Answer
Answer:a Net sales=Sales-Discount-inventory returned
=$39900-($39900*2%)-$920
=38182
Answer:b
Answer:c Interest should be shown in the operating activities.
Answer:d Investing activities
Answer:e The primary difference between revenue and gains is that revenue is money generated through main business activities, whereas gains are achieved through peripheral business activities.
Income Statement Net Sales 38182 Less: COGS Gross Margin Less: Selling and administration expense 4200 Interest expense 360 Add: Gain on sales of land 1250 Net income