Below are the transactions and adjustments that occurred dur

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 Statement

Solution

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