1. The business was started when the company received $50,000 from the issue of common stock.
2. Purchased merchandise inventory of $380,000 on account.
3. Sold merchandise for $510,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $330,000.
4. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 2 percent of sales.
5. Paid the sales tax to the state agency on $400,000 of the sales.
6. On September 1, Year 1, borrowed $50,000 from the local bank. The note had a 4 percent interest rate and matured on March 1, Year 2.
7. Paid $6,200 for warranty repairs during the year.
8. Paid operating expenses of $78,000 for the year.
9. Paid $250,000 of accounts payable.
10. Recorded accrued interest on the note issued in transaction no. 6.

c-1. Prepare the income statement for Year 1. c-2. Prepare the balance sheet for Year 1. c-3. Prepare the statement of cash flows for Year 1.