Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co. Issued 191,000 shares of $5-par-value common stock for $955,000 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 $720,000 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 $180,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $129,000 owed for store equipment and $620,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $34,000 during the year. Collected $845,000 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 $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.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Following are the transactions and adjustments that occurred during the first year of operations at Kissick Co.

Issued 191,000 shares of $5-par-value common stock for $955,000 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 $720,000 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 $180,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days.
Paid the entire $129,000 owed for store equipment and $620,000 of the amount due to suppliers for credit purchases previously recorded.
Incurred and paid utilities expense of $34,000 during the year.
Collected $845,000 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 $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.)

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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