Below are the transactions and adjustments that occurred during the first year o
ID: 2395899 • Letter: B
Question
Below are the transactions and adjustments that occurred during the first year of operations at Kissick Co
a. Issued 190,000 shares of $5-par-value common stock for $950,000 in cash.
b. Borrowed $500,000 from Oglesby National Bank and signed a 10% note due in three years.
c. Incurred and paid $380,000 in salaries for the year.
d. Purchased $730,000 of merchandise inventory on account during the year.
e. Sold inventory costing $590,000 for a total of $910,000, all on credit.
f. Paid rent of $220,000 on the sales facilities during the first 11 months of the year.
g. Purchased $180,000 of store equipment, paying $55,000 in cash and agreeing to pay the difference within 90 days.
h. Paid the entire $125,000 owed for store equipment and $620,000 of the amount due to suppliers for credit purchases previously recorded.
i. Incurred and paid utilities expense of $35,000 during the year.
j. Collected $825,000 in cash from customers during the year for credit sales previously recorded.
k. At year-end, accrued $50,000 of interest on the note due to Oglesby National Bank.
l. 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. account affected by the transactions.) KISSICK CO Income StatementExplanation / Answer
Answers
ASSETS
LIABILITIES
STOCKHOLDER EQUITY
INCOME STATEMENT (Retained earnings)
Transaction
Cash
Accounts receivables
Merchandise Inventory
Equipment
Notes Payable
Accounts Payable
Common Stock
Net Income
Revenue
Expenses
a
$ 950,000.00
$ 950,000.00
$ -
b
$ 500,000.00
$ 500,000.00
$ -
c
$ (380,000.00)
$ (380,000.00)
$ 380,000.00
d
$ 730,000.00
$ 730,000.00
$ -
e
$ 910,000.00
$ 910,000.00
$ 910,000.00
$ (590,000.00)
$ (590,000.00)
$ 590,000.00
f
$ (220,000.00)
$ (220,000.00)
$ 220,000.00
g
$ (55,000.00)
$ 55,000.00
$ -
$ 125,000.00
$ 125,000.00
$ -
h
$ (745,000.00)
$ (745,000.00)
$ -
i
$ (41,000.00)
$ (41,000.00)
$ 41,000.00
j
$ 825,000.00
$ (825,000.00)
$ -
k
$ 50,000.00
$ (50,000.00)
$ 50,000.00
l
$ 20,000.00
$ (20,000.00)
$ 20,000.00
Total
$ 834,000.00
$ 85,000.00
$ 140,000.00
$ 180,000.00
$ 550,000.00
$ 130,000.00
$ 950,000.00
$ (391,000.00)
$ 910,000.00
$ 1,301,000.00
Transaction no.
e
Sales Revenues
$ 910,000.00
e
Cost of Goods Sold
$ 590,000.00
Gross Profits
$ 320,000.00
Operating Expenses:
c
Salaries expense
$ 380,000.00
f + l
Rent Expenses
$ 240,000.00
i
Utilities expense
$ 41,000.00
Total operating expenses
$ 661,000.00
Operating Income
$ (341,000.00)
Other revenues & expenses
j
Interest expense
$ 50,000.00
Net Income (Loss)
$ (391,000.00)
ASSETS
Current Assets:
Cash
$ 834,000.00
Accounts receivables
$ 85,000.00
Merchandise Inventory
$ 140,000.00
Total current assets
$ 1,059,000.00
Equipment
$ 180,000.00
Total Assets
$ 1,239,000.00
LIABILITIES
Accounts Payable
$ 110,000.00
Interest Payable
$ 50,000.00
Rent (Expense) Payable
$ 20,000.00
Total current Liabilities
$ 180,000.00
Notes Payable
$ 500,000.00
Total Liabilities
$ 680,000.00
STOCKHOLDERS' EQUITY
Common Stock
$ 950,000.00
Retained Earnings [Net Income (loss)]
$ (391,000.00)
Total Stockholders' Equity
$ 559,000.00
Total Liabilities & Stockholder's Equity
$ 1,239,000.00
ASSETS
LIABILITIES
STOCKHOLDER EQUITY
INCOME STATEMENT (Retained earnings)
Transaction
Cash
Accounts receivables
Merchandise Inventory
Equipment
Notes Payable
Accounts Payable
Common Stock
Net Income
Revenue
Expenses
a
$ 950,000.00
$ 950,000.00
$ -
b
$ 500,000.00
$ 500,000.00
$ -
c
$ (380,000.00)
$ (380,000.00)
$ 380,000.00
d
$ 730,000.00
$ 730,000.00
$ -
e
$ 910,000.00
$ 910,000.00
$ 910,000.00
$ (590,000.00)
$ (590,000.00)
$ 590,000.00
f
$ (220,000.00)
$ (220,000.00)
$ 220,000.00
g
$ (55,000.00)
$ 55,000.00
$ -
$ 125,000.00
$ 125,000.00
$ -
h
$ (745,000.00)
$ (745,000.00)
$ -
i
$ (41,000.00)
$ (41,000.00)
$ 41,000.00
j
$ 825,000.00
$ (825,000.00)
$ -
k
$ 50,000.00
$ (50,000.00)
$ 50,000.00
l
$ 20,000.00
$ (20,000.00)
$ 20,000.00
Total
$ 834,000.00
$ 85,000.00
$ 140,000.00
$ 180,000.00
$ 550,000.00
$ 130,000.00
$ 950,000.00
$ (391,000.00)
$ 910,000.00
$ 1,301,000.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.