Problem 4-24 (Static) Prepare an income statement and balance sheet from transaction data LO 4-1 Following are the transactions and adjustments that occurred during the first year of operations at Kissick Company. Issued 800,000 shares of $5-par-value common stock for $400,000 in cash. Borrowed $200,000 from Oglesby National Bank and signed a 8% note due in three years. Incurred and paid $160,000 in salaries for the year. Purchased $301,000 of merchandise inventory on account during the year. Sold inventory costing $205,000 for a total of $250,000, all on credit. Paid rent of $44,000 on the sales facilities during the first 11 months of the year. Purchased $60,000 of store equipment, paying $18,000 in cash and agreeing to pay the difference within 90 days. Paid the entire $42,000 owed for store equipment and $227,000 of the amount due to suppliers for credit purchases previously recorded. Incurred and paid utilities expense of $15,000 during the year. Collected $221,000 in cash from customers during the year for credit sales previously recorded. At year-end, accrued $16,000 of interest on the note due to Oglesby National Bank. At year-end, accrued $4,000 of past-due December rent on the sales facilities. Required: a. Prepare an income statement (ignoring income taxes) for Kissick Company'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.) Reminder: Increases to expenses should be entered as negative numbers to show the impact on net income. See Exhibit 4.3.

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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Problem 4-24 (Static) Prepare an income statement and balance sheet from transaction data LO 4-1

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

Issued 800,000 shares of $5-par-value common stock for $400,000 in cash.
Borrowed $200,000 from Oglesby National Bank and signed a 8% note due in three years.
Incurred and paid $160,000 in salaries for the year.
Purchased $301,000 of merchandise inventory on account during the year.
Sold inventory costing $205,000 for a total of $250,000, all on credit.
Paid rent of $44,000 on the sales facilities during the first 11 months of the year.
Purchased $60,000 of store equipment, paying $18,000 in cash and agreeing to pay the difference within 90 days.
Paid the entire $42,000 owed for store equipment and $227,000 of the amount due to suppliers for credit purchases previously recorded.
Incurred and paid utilities expense of $15,000 during the year.
Collected $221,000 in cash from customers during the year for credit sales previously recorded.
At year-end, accrued $16,000 of interest on the note due to Oglesby National Bank.
At year-end, accrued $4,000 of past-due December rent on the sales facilities.

Required:

a. Prepare an income statement (ignoring income taxes) for Kissick Company'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.) Reminder: Increases to expenses should be entered as negative numbers to show the impact on net income. See Exhibit 4.3.

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