Below are the transactions and adjustments that occurred during the first year o

Question

Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co Issued 192,000 shares of $5-par-value common stock for $960,000 in cash. Borrowed $530,000 from Oglesby National Bank and signed a 10% note due in three years. Incurred and paid $390,000 in salaries for the year. Purchased $710,000 of merchandise inventory on account during the year. Sold inventory costing $580,000 for a total of $920,000, all on credit. Paid rent of $110,000 on the sales facilities during the first 11 months of the year. Purchased $190,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $139,000 owed for store equipment and $590,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $37,000 during the year. Collected $855,000 in cash from customers during the year for credit sales previously recorded. At year-end, accrued $53,000 of interest on the note due to Oglesby National Bank. At year-end, accrued $10,000 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.)
Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co Issued 192,000 shares of $5-par-value common stock for $960,000 in cash. Borrowed $530,000 from Oglesby National Bank and signed a 10% note due in three years. Incurred and paid $390,000 in salaries for the year. Purchased $710,000 of merchandise inventory on account during the year. Sold inventory costing $580,000 for a total of $920,000, all on credit. Paid rent of $110,000 on the sales facilities during the first 11 months of the year. Purchased $190,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $139,000 owed for store equipment and $590,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $37,000 during the year. Collected $855,000 in cash from customers during the year for credit sales previously recorded. At year-end, accrued $53,000 of interest on the note due to Oglesby National Bank. At year-end, accrued $10,000 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.)
Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co Issued 192,000 shares of $5-par-value common stock for $960,000 in cash. Borrowed $530,000 from Oglesby National Bank and signed a 10% note due in three years. Incurred and paid $390,000 in salaries for the year. Purchased $710,000 of merchandise inventory on account during the year. Sold inventory costing $580,000 for a total of $920,000, all on credit. Paid rent of $110,000 on the sales facilities during the first 11 months of the year. Purchased $190,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $139,000 owed for store equipment and $590,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $37,000 during the year. Collected $855,000 in cash from customers during the year for credit sales previously recorded. At year-end, accrued $53,000 of interest on the note due to Oglesby National Bank. At year-end, accrued $10,000 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.) (Amounts to be deducted and net loss should be indicated with minus sign.)

Explanation / Answer

Transaction General Journal Debit Credit a) Cash $960,000.00 Common Stock $960,000.00 b) Cash $530,000.00 Notes Payable $530,000.00 c) Salaries expense $390,000.00 Cash $390,000.00 d) Merchandise inventory $710,000.00 Accounts payable $710,000.00 e1) Accounts receivable $920,000.00 Sales $920,000.00 e2) Cost of goods sold $580,000.00 Merchandise inventory $580,000.00 f) Rent expense $110,000.00 Cash $110,000.00 g) Equipment $190,000.00 Accounts Payable $139,000.00 Cash $51,000.00 h) Accounts payable $729,000.00 Cash $729,000.00 i) Utilities expense $37,000.00 Cash $37,000.00 j) Cash $855,000.00 Accounts Receivables $855,000.00 k) Interest expense $53,000.00 Interest payable $53,000.00 l Rent expense 10000 Rent Payable 10000 Kissick Co.'s Income Statement For the Year Ended, December 31, 2017 Sales $920,000.00 Cost of goods sold -$580,000.00 Gross profit $340,000.00 Selling, general, and administrative expenses (390,000+110,000+37000+10000) -$547,000.00 Loss from operation -$207,000.00 Interest expense -$53,000.00 Net income -$260,000.00 Net income per share of common stock outstanding = -$260,000/192,000 -$1.35 Kissick Co.'s Balance Sheet December 31, 2017 Assets Current Assets Cash and cash equivalents $1,028,000.00 Accounts receivable ($920,000 - 855,000) $65,000.00 Inventory ($710,000 - $580,000) $130,000.00 Total Current Assets $1,223,000.00 Equipment $190,000.00 Total Assets $1,413,000.00 Liabilities Current Liabilities Accounts payable ($710,000+139,000 - 729,000) $120,000.00 Interest payable $53,000.00 Rent payable $10,000.00 Total Current Liabilities $183,000.00 Notes payable $530,000.00 Total Liabilities $713,000.00 Owner’s Equity Common stock $960,000.00 Retained earnings -$260,000.00 Total owner’s equity $700,000.00 Total liabilities and owner’s equity $1,413,000.00

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