The Slamming Sam Golf Club Company decided to expand its manufacturing operations as a result of receiving a new order for golf clubs from a distributor. On July 1, 2000, the company acquired a new machine for manufacturing the clubs, from a supplier at a cost of $500,000. The supplier offers to accept either immediate payment or a nine-month note with interest of 10%. The company expects to produce 5,000 clubs during the re- maining six months of the year and incur materials costs of $30 for each club evenly over the period. Since Slamming Sam will not sell the clubs to the public until the spring of 2001, the materials supplier offers terms of immediate payment less a 5% discount if paid within ten days, or full payment within two months, or delayed payment until 2000 with interest charged at 12% after two months until full payment is received.

Required: Compute the amount of the liabilities that the company will have on Decem- ber 31, 2000 under each of the alternative situations. (Assume a 360-day year.)

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