The following transactions apply to Ozark Sales for Year 1:
- The business was started when the company received $49,000 from the issue of common stock.
- Purchased equipment inventory of $177,500 on account.
- Sold equipment for $202,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $127,000.
- Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 3 percent of sales.
- Paid the sales tax to the state agency on $152,000 of the sales.
- On September 1, Year 1, borrowed $21,000 from the local bank. The note had a 6 percent interest rate and matured on March 1, Year 2.
- Paid $5,700 for warranty repairs during the year.
- Paid operating expenses of $55,500 for the year.
- Paid $124,200 of accounts payable.
- Recorded accrued interest on the note issued in transaction no. 6.
Required
- Record the given transactions in a horizontal statements model.
- Prepare the income statement, balance sheet, and statement of cash flows for Year 1.
- What is the total amount of current liabilities at December 31, Year 1?