The following transactions apply to Comfort Mattress Sales for 2

The following transactions apply to Comfort Mattress Sales for 2010.

1. The business was started when the company received $30,000 from the issue of common stock.

2. Purchased mattress inventory of $200,000 on account.

3. Sold mattresses for $300,000 cash (not including sales tax). Sales tax of 8 percent is collected when the merchandise is sold. The merchandise had a cost of $150,000.

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

5. Paid the sales tax to the state agency on $250,000 of the sales.

6. On September 1, 2010, borrowed $30,000 from the local bank. The note had a 6 percent interest rate and matured on March 1, 2011.

7. Paid $4,600 for warranty repairs during the year.

8. Paid operating expenses of $96,000 for the year.

9. Paid $175,000 of accounts payable.

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

Required

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


The following transactions apply to Comfort Mattress Sales for 2


b. Prepare the income statement, balance sheet, and statement of cash flows for 2010.
c. What is the total amount of current liabilities at December 31,2010?

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