Exercise $7-21$A $($Algo$)$ Current liabilities LO $7-1,7-2,7-4,7-10$

The following transactions apply to Orark Sales for Year t:

The business was stavted when the compony recelved $$48,000$ fion the issue of common stock.

Purchased equipment inventory of $$78,000$ on account.

Sold equipment for $$203,500$ cash $($not including sales tax$).$ Sales tax of $7$ percent is collected when the merchandise is sold. The merchandise had a cost of $$128\mathrm{.}500.$

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

Pald the sales ux to the state agency on $$153,500$ of the sales.

On September $1$ Year t$,$ borowed $$19,500$ liom the local bank, The note had a $6$ percent interest rate and matured on March $1,$ Year $2.$

Paid $$5,800$ for warranty repalrs during the yeat,

a$.$ Paid operating expenses of $$54500$ for the year

Paid $$124,000$ of accounts payable.

Recorded accrued interest on the nole issued in transaction no$,6.$

Required:

a$.$ Use a horlsontal financial statements model to show how each event affects the balance sheet income statement, and statement of carch flows. More specifically, record the amounts of the events into the model, Abo, in the Statement of Cash Flows column, classify the cash flows as operating activities $($OA$),$ Imvesting activities $($AL$)$ or financing actwities $($FA$).$

b$.$ Prepare the income statement, balance sheet, and statement of cash flows for Year $1.$

c$.$ What is the lotal amount of current liablizies at December $31.$ Year $?$