Question

Check my w Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co. a. Issued 193,000 shares of $4-par-value common stock for $772,000 in cash. b. Borrowed $520,000 from Oglesby National Bank and signed a 11% note due in three years. c. Incurred and paid $400,000 in salaries for the year. d. Purchased $670,000 of merchandise inventory on account during the year. e. Sold inventory costing $580,000 for a total of $900,000, all on credit. 1. Paid rent of $220,000 on the sales facilities during the first 11 months of the year. g. Purchased $160,000 of store equipment, paying $53,000 in cash and agreeing to pay the difference within 90 days. h. Paid the entire $107,000 owed for store equipment and $610,000 of the amount due to suppliers for credit purchases previously recorded. 1. Incurred and paid utilities expense of $37,000 during the year. J. Collected $835,000 in cash from customers during the year for credit sales previously recorded. k. At year-end, accrued $57,200 of interest on the note due to Oglesby National Bank 1. At year-end, accrued $20,000 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 < Prey 5 of 12 !!! Next >

Answer 1

900,000 580,000 320,000 Kissick Co. Income Statement Sales Cost of goods sold Gross Profit Operating Expenses Salaries expense Rent expense Utilities expenses Total Operating Expenses Operating Income (Loss) Interest expense Net Income (loss) 400,000 240,000 37,000 677,000 (357,000) 57,200 (414,200)

Kissick Co. Balance Sheet Assets Current Assets Cash Accounts Receivable Inventory Total Current Assets Liabilities Current Liabilities 700,000 Accounts Payable 65,000 Interest Payable 90,000 Rent Payable 855,000 Total Current Liabilities 60,000 57,200 20,000 137,200 Property, Plant & Equipment Store Equipment 160,000 Non-Current Liabilities 11% Notes Payable Total Liabilities 520,000 657,200 Stockholders Equity Common Stock Retained Earnings (Loss) Total Stockholders Equity 772,000 (414,200) 357,800 Total Assets 1,015,000 Total Liabilities & Stockholders Equity 1,015,000

Credit Date Credit Date Credit Date Credit Kissick Co. T Accounts Date Debit Date Cash $ 772,000C $ 520,000 $ 835,000 g Debit Date Accounts Receivable Debit Date Inventory $ 670,000 e Debit Date Store Equipment $ 160,000 e $835,000 d $ 580,000 & $400,000 $220,000 $ 53,000 $ 107,000 $ 610,000 $ 37,000 Bal. Bal. $ 65,000 Interest Payable $ 90,000 Rent Payable $ 160,000 11% Notes Payable $ 700,000 Accounts Payable $ 107,000 d $ 610,000 h $ 57,200 $ 20,000 $ 520,000 $ 670,000 $ 107,000 $ 60,000 $ 57,200 $ 20,000 $ 520,000 Bal. Common Stock Bal. Income Summary $1,314,200 Bal. Retained Earnings $414,200 $ 772,000 n $ 900,000 $414,200 $ 772,000 Bal. $ $(414,200) Bal. Sales Bal. Salaries expense Cost of goods sold $ 580,000 $900,000 e $ $ Rent expense 220,000 20,000 $ 900,000 $ 580,000 $ 400,000 1 $ 240,000 $ - Bal. Bal. $ - $ Utilities expenses $ 37,000 n Interest expense 57,200 $ 37,000 k $ $ 57,200 Bal. $ . Bal. $ -