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Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co. Issued 197,000 shares of $4-par-value common stock for
Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co.
- Issued 197,000 shares of $4-par-value common stock for $788,000 in cash.
- Borrowed $540,000 from Oglesby National Bank and signed a 11% note due in three years.
- Incurred and paid $400,000 in salaries for the year.
- Purchased $730,000 of merchandise inventory on account during the year.
- Sold inventory costing $570,000 for a total of $910,000, all on credit.
- Paid rent of $220,000 on the sales facilities during the first 11 months of the year.
- Purchased $150,000 of store equipment, paying $53,000 in cash and agreeing to pay the difference within 90 days.
- Paid the entire $97,000 owed for store equipment and $620,000 of the amount due to suppliers for credit purchases previously recorded.
- Incurred and paid utilities expense of $36,000 during the year.
- Collected $835,000 in cash from customers during the year for credit sales previously recorded.
- At year-end, accrued $59,400 of interest on the note due to Oglesby National Bank.
- 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.)
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