Perfect Picture Inc. (PPI) experienced the following transactions during 2007. The transactions are summarized (transaction data pertain to the full year) and limited to those that affect the company’s current liabilities.

1. PPI had cash sales of \($820,000\). The state requires that PPI charge customers an 8 percent sales tax (ignore cost of goods sold).

2. PPI paid the state sales tax authority \($63,000\) .

3. On March 1, PPI issued a note payable to the County Bank. PPI received \($50,000\) cash (principal balance). The note had a one-year term and a 6 percent annual interest rate.

4. On December 31, PPI recognized accrued interest on the note issued in Event 3.

5. On December 31, PPI recognized warranty expense at the rate of 3 percent of sales.

6. PPI paid \($22,000\) cash to settle warranty claims.

7. On January 1, 2006, PPI issued a \($100,000\) installment note. The note had a 10-year term and an 8 percent interest rate. PPI agreed to repay the principal and interest in 10 annual interest payments of \($14,902.94\) at the end of each year.

Required:
Prepare the liabilities section of the December 31, 2007, balance sheet.