The following transactions apply to Ozark Sales for Year

1: The business was started when the company received $49,000 from the issue of common stock.
2. Purchased equipment inventory of $176,500 on account. Sold equipment for $203,000 cash (not including sales tax).
3. Sales tax of 7 percent is collected when the merchandise is sold. The merchandise had a cost of $128,000.
4. Provided a six-month warranty on the equipment sold. Based on industry estimates, the warranty claims would amount to 3 percent of sales.
5. Paid the sales tax to the state agency on $153,000 of the sales.
6. On September 1, Year 1, borrowed $20,000 from the local bank. The note had a 6 percent interest rate and matured on March 1, Year 2.
7. Paid $5,500 for warranty repairs during the year.
8. Paid operating expenses of $53,500 for the year.
9. Paid $124,200 of accounts payable.
10. Recorded accrued interest on the note issued in transaction no. 6.

Required:
a. Prepare the journal entries for the above transactions and post them to the appropriate T-accounts.
b. Prepare the income statement, balance sheet, and statement of cash flows for 2016.
c. What is the total amount of current liabilities at December 31, 2016?

Afirm's before-tax cost of debt, rd, is the interest rate that the firm must pay on debt. because interest is tax deductible, the relevant cost of debt used to calculate a firm's wacc is the cost of debt, rd (1 – t). the cost of debt is used in calculating the wacc because we are interested in maximizing the value of the firm's stock, and the stock price depends on cash flows. it is important to emphasize that the cost of debt is the interest rate on debt, not debt because our primary concern with the cost of capital is its use in capital budgeting decisions. the rate at which the firm has borrowed in the past is because we need to know the cost of capital. for these reasons, the on outstanding debt (which reflects current market conditions) is a better measure of the cost of debt than the . the on the company's -term debt is generally used to calculate the cost of debt because more often than not, the capital is being raised to fund -term projects. quantitative problem: 5 years ago, barton industries issued 25-year noncallable, semiannual bonds with a $1,600 face value and a 8% coupon, semiannual payment ($64 payment every 6 months). the bonds currently sell for $845.87. if the firm's marginal tax rate is 40%, what is the firm's after-tax cost of debt? round your answer to 2 decimal places. do not round intermediate calcu