Question

a. Issued 193,000 shares of $5-par-value common stock for $965,000 in cash. b. Borowed S530.00 from Ogesty National Bank and signed a 12% note due in three years. С.hored and paid $300, insalanes for the year d. Purchased $680,000 of merchandise inventory on account during the year e. Sold inventory costing $590,000 for a total of $920,000, all on aredit t. 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 $620,000 of the amount due to suppliers for credit purchases previously record L Incurred and paid utities expense of $34,000 during the year Collected $855,000 in cash from customers during the year for credit sales previously recorded At year-end, accrued $63,600 of interest on the note due to Oglesby National Bank L 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 Hint: You may find it helpfuil to prepare T-accounts for each account affected by the transactions) sold from Amounts to be deducted and net loss should be indicated with minus sign.) Assets: Total current assets

Answer 1

	KISSICK Co.
	Income Statement
	Sales		$   9,20,000
Less:	Cost of goods sold		$   5,90,000
	Gross Profit		$   3,30,000
Less:	Selling and administrative expenses
	Salaries Expense	$   3,90,000
	Rent expense ($220000+20000)	$   2,40,000
	Utilities expense	$       34,000
	Interest expense	$       63,600	$   7,27,600
	Net Income (loss)		$ -3,97,600
	KISSICK Co.
	Balance Sheet
	Assets :
	Current assets
	Cash*	$   9,26,000
	Accounts receivable ($920000-$855000)	$       65,000
	Merchandise Inventory ($680000-$590000)	$       90,000
	Total Current assets		$ 10,81,000
	Property Plant and Equipment
	Equipment		$   1,60,000
	Total assets		$ 12,41,000
	Liabilities and Stock holder's Equity :
	Current Liabilities
	Accounts payable ($680000-$620000)	$       60,000
	Interest Payable	$       63,600
	Rent Payable	$       20,000
	Total Current Liabilities		$   1,43,600
	Long term Liabilities
	Notes Payable		$   5,30,000
	Stock holder's Equity
	Common stock, $5 par, 193000 shares issued and outstanding	$   9,65,000
	Retained Earnings (balancing figure)	$ -3,97,600
	Total Stock holder's Equity		$   5,67,400
	Total Liabilities and Stock holder's Equity		$ 12,41,000
	*Cash:
	(965000 + 530000 - 390000 - 220000 - 53000 - 107000 - 620000 - 34000 + 855000) = 926000