Question

Following are the transactions and stments that occurred during the first year of operations at Kissick Co. a. Issued 194,000 shares of $5-par-value common stock for $970,000 in cash. b. Borrowed $510,000 from Oglesby National Bank and signed a 11% note due in three ye c. Incurred and paid $410,000 in salaries for the year. d. Purchased $700,000 of merchandise inventory on account during the year. e. Sold inventory costing $580,000 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 $180,000 of store equipment, paying $53.000 in cash and agreeing to pay the difference within 90 days. h. Paid the entire $127.000 owed for store equipment and $610.000 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 $835.000 in cash' n customers during the year for credit sales previously recorded. k. At year-end, accrued $56,100 of interest on the note due to Oglesby National Bank I. At year-end, accrued $10,000 of past due December rent on the so 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.) Atlan hantarinn var < Prev 2 of 4 !!! Next > Type here to search

Answer 1

Working as follows: Transaction Account name | Debit Credit $970,000 Cash (194,000*$5) Common stock $970.000 $510,000 Cash Note payable $510,000 $410.000 Salaries expense Cash $410,000 d $700,000 Inventory Accounts payable $700,000 $910,000 Accounts receivable Sales revenue $910.000 $580.000 COGS Inventory $580.000 f $110,000 Rent expense Cash $110.000

$180,000 Store equipment Cash Accounts payable-store $53,000 $127.000 Accounts payable-store Accounts payable Cash $127.000 $610,000 $737,000 Utilities expense Cash $34.000 $34.000 $835,000 Cash Accounts receivable $835,000 $56.100 Interest expense Interest payable $56,100 $10,000 Rent expense Rent payable $10,000 Prepare Income statement as follows:

$910,000 $580,000 $330,000 KISSICK CO. Income Statement Sales revenue Less: COGS Gross profit Less: operating expense Salaries expense Rent expense ($110000+$10000) Utilities expense Interest expense $410,000 $120,000 $34.000 $56.100 Net loss ($290.100) Prepare Balance sheet as follows:

KISSICK CO. Balance Sheet Assets: Current assets Cash Accounts receivable ($910,000-$835,000) Inventory ($700,000 - $580,000) Total current assets $971.000 $75,000 $120,000 $1,166,000 Fixed assets: Equipment $180,000 Total Assets $1.346.000

Liabilities: Current Accounts payable ($700,000 - $610,000) Interest payable Rent payable Total $90,000 $56,100 $10,000 $156,100 Non-current Note payable $510,000 Stockholders' equity Common stock Retained earnings Total $970,000 ($290.100) $679,900 Total Liabilities and stockholders' equity $1,346,000