Question: The following transactions apply to Midsouth Equipment Sales Corp. for 2014:
1. The business was started when Midsouth received $49,500 from the issue of common stock.
2. Purchased $177,000 of merchandise on account.
3. Sold merchandise for $193,000 cash (not including sales tax). Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $118,000.
4. Provided a six-month warranty on the merchandise sold. Based on industry estimates, the warranty claims would amount to 5 percent of merchandise sales.
5. Paid the sales tax to the state agency on $143,000 of the sales.
6. On September 1, 2014, borrowed $21,000 from the local bank. The note had a 6 percent interest rate and matures on March 1, 2015.
7. Paid $6,000 for warranty repairs during the year.
8. Paid operating expenses of $55,000 for the year.
9. Paid $125,500 of accounts payable.
10. Recorded accrued interest at the end of the year.
Record the above transactions in a horizontal statements model like the following one. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA). The letters NA indicate that an element is not affected by the event Prepare the income statement for 2014 Prepare the balance sheet for 2014. Prepare the statement of cash flows for 2014. What is the total amount of current liabilities at December 31, 2014?