The following selected transactions were taken from the books of Ripley Company for Year $1$:

$1.$ On February $1,$ Year $1,$ borrowed $$49,000$ cash from the local bank. The note had a $5$ percent interest rate and was due on June $1,$ Year $1.$

$2.$ Cash sales for the year amounted to $$240,000$ plus sales tax at the rate of $8$ percent.

$3.$ Ripley provides a $90-$day warranty on the merchandise sold. The warranty expense is estimated to be $3$ percent of sales.

$4.$ Paid the sales tax to the state sales tax agency on $$185,000$ of the sales.

$5.$ Paid the note due on June $1$ and the related interest.

$6.$ On November $1,$ Year $1,$ borrowed $$39,000$ cash from the local bank. The note had a $6$ percent interest rate and a one$-$year term to maturity.

$7.$ Paid $$3,900$ in warranty repairs.

$8.$ A customer has filed a lawsuit against Ripley for $$80,000$ for breach of contract. The company attorney does not believe the suit has merit.

Required

a$.$ Answer the following questions:

$1.$ What amount of cash did Ripley pay for interest during Year $1?$

$2.$ What amount of interest expense is reported on Ripley$$s income statement for Year $1?$

$3.$ What is the amount of warranty expense for Year $1?$

b$.$ Post the liabilities transactions to T$-$accounts and prepare the current liabilities section of the balance sheet at December $31,$ Year $1.$

c$.$ Show the effect of these transactions on the financial statements using a horizontal statements model like the one shown next. Use $+$ for increase, $$ for decrease, and NA for not affected. In the Cash Flow column, indicate whether the item is an operating activity $($OA$),$ investing activity $($IA$),$ or financing activity $($FA$)$ or not affected $($NA$).$