Question

Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co. a. Issued 196,000 shares of $5-par-value common stock for $980,000 in cash. b. Borrowed $530,000 from Oglesby National Bank and signed a 11% note due in three years. c. Incurred and paid $390,000 in salaries for the year. d. Purchased $660,000 of merchandise inventory on account during the year. e. Sold inventory costing $590,000 for a total of $910,000, all on credit. f. Paid rent of $110,000 on the sales facilities during the first 11 months of the year. g. Purchased $170,000 of store equipment, paying $55,000 in cash and agreeing to pay the difference within 90 days. h. Paid the entire $115,000 owed for store equipment and $620,000 of the amount due to suppliers for credit purchases previously recorded. i. Incurred and paid utilities expense of $34,000 during the year. j. Collected $845,000 in cash from customers during the year for credit sales previously recorded. k. At year-end, accrued $58,300 of interest on the note due to Oglesby National Bank. I. At year-end, accrued $10,000 of past-due December rent on the sales facilities. Required: a. Prepare an income statement (ignoring income taxes) for Kissick Co.'s first year of operations and a balance sheet as of the end of the year. (Hint You may find it helpful to prepare a T-account for the Cash account since it is affected by most of the transactions.) Complete this question by entering your answers in the tabs below. Required A1 Required A2 Prepare a balance sheet as of the end of the year. (Hint: You may find it helpful to prepare a T-account for the Cash account since it is affected by most of the transactions.) (Amounts to be deducted and net loss should be indicated with minus sign.)

please explain how to do these as well

Answer 1

686 687 688 689 690 691 Amount $ $ 910,000 $ 590,000 $ 320,000 Income statement For the year ended xxx Particulars Sales Cost of goods sold Gross Margin/profit Less: Selling and administrative expenses Salaries expense $ 390,000 Rent expense (12 months] $ 120,000 Utilties expense $ 34,000 Interest expense $ 58,300 Net income (loss) 693 694 695 Includes accrued rent for 12th month = 110,000 +10,000 696 697 698 699 $ $ 602,300 (282,300)

A 700 701 702 Amount $ Amount $ 703 704 705 706 707 708 KISSICK Co. Balance Sheet Assets: Current assets Cash* Accounts receivable ($910000-$845000) Merchandise Inventory ($660000-$590000) Total Current assets $ $ $ 1,031,000 65,000 70,000 $ 1,166,000 709 710 711 Property Plant and Equipment Equipment Total assets $ $ 170,000 1,336,000 712 713 714 715 716 Liabilities and Stock holder's Equity : Current Liabilities Accounts payable ($660000-$620000) Interest Payable Rent Payable Total Current Liabilities Long term Liabilities Notes Payable Total libilities $ $ $ 40,000 58,300 10,000 718 719 | $ 108,300 722 $ $ 530,000 638,300 724 726 Stock holder's Equity Common stock, $5 par, 196000 shares issued and outstanding $ Retained Earnings $ Total Stock holder's Equity Total Liabilities and Stock holder's Equity 980,000 (282,300) 728 $ $ 697,700 1,336,000

Accounts payable $115,000 $620,000 Ending balance $660,000 $115,000 $40,000 Cash $980,000 $530,000 $845,000 10 $390,000 $110,000 $55,000 $115,000 $620,000 $34,000 $1,031,000 Ending balance

formulaes

D 687 688 689 690 691 C Income statement For the year ended xxx Particulars Sales Cost of goods sold Gross Margin/profit Less: Selling and administrative expense Salaries expense 390000 Rent expense (12 months) 120000 Utilties expense 34000 Interest expense 58300 Net income (loss) Amount $ 910000 590000 =+D690-D691 692 693 694 695 696 697 =+SUM(C694:C697) =+D692-D697 698 699

701 702 703 Amount $ co E KISSICK Co. Balance Sheet Assets : Amount $ Current assets Cash* 1031000 Accounts receivable ($910000-$845000) 65000 Merchandise Inventory ($660000-$59000 70000 Total Current assets 705 707 =+E705+E706+E707 708 709 Property Plant and Equipment Equipment Total assets 712 170000 =+F708+F711 714 716 717 Liabilities and Stock holder's Equity : Current Liabilities Accounts payable ($660000-$620000) Interest Payable Rent Payable Total Current Liabilities Long term Liabilities Notes Payable Total libilities 40000 58300 10000 718 719 =+E716+E717+E718 530000 =+F719+F721 Stock holder's Equity Common stock, $5 par, 196000 shares iss Retained Earnings Total Stock holder's Equity Total Liabilities and Stock holder's Equity 980000 -282300 728 =+E725+E726 =+F722+F727 729