The following transactions apply to Midsouth Equipment Sales Corp. for 2014:

1. The business was started when Midsouth received $49,000 from the issue of common stock.

2. Purchased $178,000 of merchandise on account.

3. Sold merchandise for $204,500 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $129,500.

4. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 3 percent of merchandise sales.

5. Paid the sales tax to the state agency on $154,500 of the sales.

6. On September 1, 2014, borrowed $20,000 from the local bank. The note had a 7 percent interest rate and matures on March 1, 2015.

7. Paid $5,500 for warranty repairs during the year.

8. Paid operating expenses of $55,000 for the year.

9. Paid $124,400 of accounts payable.

10. Recorded accrued interest at the end of the year.