The following transactions apply to Midsouth Equiptment Sales Corp for 2013.

1. The business started with 60000 from the issue of common stock.

2. purchased 160000 in merchandise on account.

3. Sold merchandise for 220000 cash(not including sales tax). Sales tax of 8% is colected when the merchandise is sold. The merchadise had a cost of 140000.

4. provided a six month warranty on merchandise sold. Based on industry estimates, the warranty claims would amount to 4% of merchandise sales.

5. Paid sales tax to the state agency on 180000 of the sales.

6. On Sept 1 2013, borrowed 40000 from the local bank. The note had 6% interest rate and matures on March 1, 2014.

7. Paid 6600 for warranty repairs during the year.

8. Paid operating expenses of 61,000 for the year.

9 Paid 145000 of accounts payable.

10. Recorded accured interest at the end of the year.

 

a. Show the effect of these transactions using a horizontal statement. Use a + to indicate increase, a - for decrease, and N/A for not affected. In the cash flow column indicate whether the item is an operatingactivity (OA), investing Activity (IA), or Financial Activity (FA).

b. Prepare the journal entries for the above transactions and post them in the appropiate T-accounts.

c. Prepare the income statement, balance sheet, and statement of cash flows for 2013.

d. What is the toal amount of current liabilities at DEC 31, 2013?