Free

80.2K

Verified Solution

Link Copied!

Below are the transactions and adjustments that occurredduring 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 duringthe year.

Sold inventory costing $580,000 for a total of $920,000, allon credit.

Paid rent of $110,000 on the sales facilities during the first11 months of the year.

Purchased $190,000 of store equipment, paying $51,000 in cashand agreeing to pay the difference within 90 days.

Paid the entire $139,000 owed for store equipment and $590,000of the amount due to suppliers for credit purchases previouslyrecorded.

Incurred and paid utilities expense of $37,000 during theyear.

Collected $855,000 in cash from customers during the year forcredit sales previously recorded.

At year-end, accrued $53,000 of interest on the note due toOglesby National Bank.

At year-end, accrued $10,000 of past-due December rent on thesales facilities.

Required:

a. Prepare an income statement (ignoring income taxes) forKissick Co.'s first year of operations and a balance sheet as ofthe end of the year. (Hint: You may find it helpful to prepareT-accounts for each account affected by the transactions.)

(Amounts to be deducted and net loss should be indicated withminus sign.)