Question
Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co Issued 196,000 shares of $5-par-value common stock for
Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co
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Issued 196,000 shares of $5-par-value common stock for $980,000 in cash.
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Borrowed $540,000 from Oglesby National Bank and signed a 10% note due in three years.
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Incurred and paid $390,000 in salaries for the year.
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Purchased $730,000 of merchandise inventory on account during the year.
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Sold inventory costing $590,000 for a total of $900,000, all on credit.
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Paid rent of $220,000 on the sales facilities during the first 11 months of the year.
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Purchased $160,000 of store equipment, paying $53,000 in cash and agreeing to pay the difference within 90 days.
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Paid the entire $107,000 owed for store equipment and $600,000 of the amount due to suppliers for credit purchases previously recorded.
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Incurred and paid utilities expense of $37,000 during the year.
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Collected $855,000 in cash from customers during the year for credit sales previously recorded.
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At year-end, accrued $54,000 of interest on the note due to Oglesby National Bank.
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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 T-accounts for each account affected by the transactions.)(Amounts to be deducted and net loss should be indicated with minus sign.)
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