To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $190,000 and sold them for $300,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 2 percent of sales. During the year, she paid $3,320 cash to replace a defective tuner.
To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of operations, Daun purchased the stereo systems for $190,000 and sold them for $300,000 cash. She provided her customers with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims would amount to 2 percent of sales. During the year, she paid $3,320 cash to replace a defective tuner.
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 45P
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Question
Answer the question please.
Transcribed Image Text:To support herself while attending school, Daun Deloch sold stereo systems to other students. During the first year of
operations, Daun purchased the stereo systems for $190,000 and sold them for $300,000 cash. She provided her customers
with a one-year warranty against defects in parts and labor. Based on industry standards, she estimated that warranty claims
would amount to 2 percent of sales. During the year, she paid $3,320 cash to replace a defective tuner.
Required
Prepare an income statement and statement of cash flows for Daun's first year of operation. (Statement of Cash Flows only,
items to be deducted must be indicated with a negative amount.)
DAUN'S STEREOS
Income Statement
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