The following transactions apply to Ozark Sales or 2016.

1. The business was started when the company received $50,000.00 from the issue of common stock.

2. Purchased equipment inventory of $380,000.00 on account.

3. Sold equipment for $510,000.00 cash(not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise has a cost of $330,000.00.

4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 2 percent of sales.

5. Paid the sales tax to the state agency of $400,000.00 of the sales.

6. On September 1, 2016, borrowed $50,000.00 from the local bank. The note had a 4 percent interest rate and matures on March 1, 2017.

7. Paid $6200.00 for warranty repairs during the year.

8. Paid operating expenses of $78,000.00 for the year.

9. Paid $250,000.00 of accounts payable.

10. Recorded accrued interest on the note issued in transaction no. 6.

a. Show the effect of these transactions of the financial statements using a horizontal statements model like the one shown. Use + for increase and - 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).

The first transaction is recorded as an example.

Assets

=

Liabilities

+

Equity

Revenue

-

Expense

=

Net Income

Cash Flow

+

NA

+

NA

NA

NA

+ FA

b. Prepare the journal entries for the above transactions and post them to the appropriate T-accounts.

c. Prepare the Income statements, Balance sheet, and Statement of Cash flows for 2016.

d. What is the total amount of Current liabilities at December 31, 2016?