1.The business was started when Baty Corp. received $292,500 from the issue of common stock.

2. Purchased $855,000 of merchandise on account.

3. Sold merchandise for $1,080,000 cash (not including sales tax). Sales tax of 8% is collected when the merchandise is sold. The merchandise had a cost of $652,500 Good idea to split this into two accounting entries - think chapter 3. Hint : 3a and 3b

4. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty payable claims would amount to 3% of merchandise sales excluding sales tax. Think of it as a contingent liability

5. Paid the sales tax of 8% to the state agency on $720,000 of the sales, (not the entire amount)

6. On September 1, 2018, borrowed $112,500 from the local bank. The note had a 8% annual interest rate and matures on August 31, 2019.

7 Paid $612,000 of accounts payable.

8 Paid $18,000 for warranty repairs during the year. This is the payment of warranties payable.

9 Paid $279,000 cash in operating expenses for the year.

10. Recorded accrued interest payable at the end of the year for 12/31.

A. Record the above transactions in a horizontal statements model.Students will have to rename asset accounts in the model to accommodate the 5 liability accounts in problem.

b. Prepare the income statement, balance sheet, and statement of cash flows for 2018.

c. What is the total amount of current liabilities at December 31, 2018?