New company start up; Owners invest $100,000 to buy shares from company.

Company buys factory equipment for $20,000; Payment terms are net 30 days; Asset life = 5 years and will be depreciated in the future using straight line depreciation.

Company buys inventory for $100,000; Payment terms - 50% @ purchase; 50% net 30 days.

Company borrows $50,000 from bank due in 5 years.

Company generates sales of $25,000 with a product cost of $40,000; Customer payment terms are net 30 days.

Company records warranty expense of $5,000 to establish a warranty reserve for potential future claims related to product sold this month.

Company pays supplier for factory equipment purchased last month (ref. item 2 above)

All customers pay company for sales generated last month (ref. item 5 above)

Company pays suppliers for inventory purchased last month (ref. item 3 above)

Company generates sales of $15,000 with a product cost of $10,000; Customer payment terms are net 30 days.

Company records warranty expense of $2,000 to establish a warranty reserve for potential future claims related to product sold this month.

Company records a bad debt receivables reserve of $2,000 for potential uncollectible receivables.

Company records first month of depreciation expense for factory equipment purchased last month (ref. item 2 above). Round to the nearest whole $ amount.

Company buys inventory for $15,000; Payment terms net 30 days.