The following transactions apply to Ozark Sales for Year 1:

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

2. Purchased merchandise inventory of $175,000 on account.

3. Sold merchandise for $194,000 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $119,000.

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

5. Paid the sales tax to the state agency on $144,000 of the sales.

6. On September 1, Year 1, borrowed $21,500 from the local bank. The note had a 5 percent interest rate and matured on March 1, Year 2.

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

8. Paid operating expenses of $53,000 for the year.

9. Paid $125,100 of accounts payable.

10. Recorded accrued interest on the note issued in transaction number 6.

REQUIRED:

b1. Prepare the journal entries for the preceding transactions. b2. Post the transaction to the appropriate T-accounts.