The following transactions apply to Mabry Equipment Sales Corp. for 2007: 1. The business was started when

Question:

The following transactions apply to Mabry Equipment Sales Corp. for 2007:

1. The business was started when Mabry Corp. received $$50,000$ from the issue of common stock.

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

3. Sold merchandise for $$200,000$ cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $$125,000$ .

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

5. Paid the sales tax to the state agency on $$150,000$ of the sales.

6. On September 1, 2007, borrowed $$20,000$ from the local bank. The note had a 6 percent interest rate and matures on March 1, 2008.

7. Paid $$5,600$ for warranty repairs during the year.

8. Paid operating expenses of $$54,000$ for the year.

9. Paid $$125,000$ of accounts payable.

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

Required:

a. Record the above transactions in a horizontal statements model like the following one.

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