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.)
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.)
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter5: Sales And Receivables
Section: Chapter Questions
Problem 79BPSB
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Transcribed Image Text:DAUN'S STEREOS
Statement of Cash Flows
Cash flow from operating activities:
Book
Net cash flow from operating activities
$
Cash flows from investing activities
Cash flows from financing activities
Net change in cash
$
Ending cash balance
What is Daun's total warranties liability at the end of the accounting period?
Total warranties liability
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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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