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Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co. a. Issued 192,000 shares of $5-par-value common stock
Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co.
a. Issued 192,000 shares of $5-par-value common stock for $960,000 in cash. b. Borrowed $510.000 from Oglesby National Bank and signed a 12% note due in three years c. Incurred and paid $390,000 in salaries for the year d. Purchased $680,000 of merchandise inventory on account during the year e. Sold inventory costing $580,000 for a total of $910,000, all on credit 1. Pald rent of $330,000 on the sales facilities during the first 11 months of the year. 9. Purchased $190,000 of store equipment paying $53,000 in cash and agreeing to pay the difference within 90 days h. Poid the entire $137.000 owed for store equipment and $620,000 of the amount due to suppliers for credit purchases previously recorded 1. Incurred and paid utilities expense of $38.000 during the year 1. Collected $825,000 in cash from customers during the year for credit sales previously recorded k. At year-end, accrued $61200 of interest on the note due to Oglesby National Bank 1. At year-end, accrued $30,000 of past due December rent on the sales facilities. Required: a. Prepare an income statement (ignoring income taxes) for Kissick Co sfestyear 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) KISSICK CO. Balance Sheet Assets: Cash Accounts receivable Merchandise inventory 100.000 100,000 190,000 290,000 $ Total current assets Equipment Total assets Liabilities: Accounts payable Interest payable Rent payable 61,200 30,000 Total current liabilities Notes payable Total liabilities Stockholders' Equity: Common stock Deficit/Net loss 0 91,200 510,000 601,200 $ $ 960,000 (519,200) 0 0 Total Stockholders' equity Total liabilities and stockholders' equity 440,800 $ 1,042,000 Step by Step Solution
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