Chapter 4, Problem 4.22P

To determine

Concept Introduction:

Balance Sheet : The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

There are two ways to present and income statement: Single-step and Multi-step. In the, multi-step income statement the net income calculated after showing multiple steps. In this statement operating and items are separate from non operating items

Requirement-1:

To Prepare:

The income statement and the balance sheet for Kissick Co

Answer to Problem 4.22P

The income statement and the balance sheet for Kissick Co is as follows:

Kissick Co.
Income Statement
Revenue:
Sales revenue		$ 132,100
Less: Expenses:
Depreciation Expense- Equipment	$ 8,400
Wages Expense	$ 48,660
Interest Expense	$ 3,000
Insurance expense	$ 3,800
Rent Expense	$ 12,500
Supplies Expense	$ 24,570
Property taxes expense	$ 12,800
Repairs Expense	$ 2,910
Other Expenses	$ 25,640
Total Expenses		$ 142,280
Net Income		$ (10,180)

Kissick Co.
Balance Sheet
ASSETS:
Current Assets:
Cash	$ 18,500
Supplies	$ 3,300
Prepaid Insurance	$ 3,400
Total Current Assets		$ 25,200
Property Plant and Equipment:
Equipment	$ 90,930
Les: Accumulated depreciation- Equipment	$ (34,650)	$ 56,280
TOTAL ASSETS		$ 81,480
LIABILITIES AND EQUITY:
Current Liabilities:
Accounts Payable	$ 6,800
Interest Payable	$ 250
Rent Payable	$ 500
Utilities Payable	$ 650
Wages payable	$ 1,800
Property taxes Payable	$ 1,000
Total Current Liabilities		$ 11,000
Long term Liabilities:
Long term notes payable		$ 25,000
Owner's Equity		$ 45,480
TOTAL LIABILITIES AND EQUITY		$ 81,480

Explanation of Solution

The income statement and the balance sheet for Kissick Co is explained as follows:

Kissick Co.
Income Statement
Revenue:
Sales revenue		$ 132,100
Less: Expenses:
Depreciation Expense- Equipment	$ 8,400
Wages Expense	$ 48,660
Interest Expense	$ 3,000
Insurance expense	$ 3,800
Rent Expense	$ 12,500
Supplies Expense	$ 24,570
Property taxes expense	$ 12,800
Repairs Expense	$ 2,910
Other Expenses	$ 25,640
Total Expenses		$ 142,280
Net Income		$ (10,180)

Kissick Co.
Balance Sheet
ASSETS:
Current Assets:
Cash	$ 18,500
Supplies	$ 3,300
Prepaid Insurance	$ 3,400
Total Current Assets		$ 25,200
Property Plant and Equipment:
Equipment	$ 90,930
Les: Accumulated depreciation- Equipment	$ (34,650)	$ 56,280
TOTAL ASSETS		$ 81,480
LIABILITIES AND EQUITY:
Current Liabilities:
Accounts Payable	$ 6,800
Interest Payable	$ 250
Rent Payable	$ 500
Utilities Payable	$ 650
Wages payable	$ 1,800
Property taxes Payable	$ 1,000
Total Current Liabilities		$ 11,000
Long term Liabilities:
Long term notes payable		$ 25,000
Owner's Equity		$ 45,480
TOTAL LIABILITIES AND EQUITY		$ 81,480

To determine

Concept Introduction:

Balance Sheet : The Balance sheet is a summary of Assets, Liabilities and equity accounts that reports the financial position of the business as on a specific date. Assets are further classifies into Current Assets, Long Term Investments, Plant Assets and Intangible assets. And Liabilities are further classified into Current Liabilities and Long term liabilities.

Income Statement:

Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.

There are two ways to present and income statement: Single-step and Multi-step. In the, multi-step income statement the net income calculated after showing multiple steps. In this statement operating and items are separate from non operating items

Requirement-2:

To Discuss:

The evaluation of the income statement and the balance sheet

Answer to Problem 4.22P

The first year of the operation of the company shows a net loss due to higher amount of expense as compared to the lower revenues for the year. The balance sheet shows a higher amount if investment in assets due to the beginning of the operations.

Explanation of Solution

The income statement and the balance sheet for Kissick Co is explained as follows:

Kissick Co.
Income Statement
Revenue:
Sales revenue		$ 132,100
Less: Expenses:
Depreciation Expense- Equipment	$ 8,400
Wages Expense	$ 48,660
Interest Expense	$ 3,000
Insurance expense	$ 3,800
Rent Expense	$ 12,500
Supplies Expense	$ 24,570
Property taxes expense	$ 12,800
Repairs Expense	$ 2,910
Other Expenses	$ 25,640
Total Expenses		$ 142,280
Net Income		$ (10,180)

Kissick Co.
Balance Sheet
ASSETS:
Current Assets:
Cash	$ 18,500
Supplies	$ 3,300
Prepaid Insurance	$ 3,400
Total Current Assets		$ 25,200
Property Plant and Equipment:
Equipment	$ 90,930
Less: Accumulated depreciation- Equipment	$ (34,650)	$ 56,280
TOTAL ASSETS		$ 81,480
LIABILITIES AND EQUITY:
Current Liabilities:
Accounts Payable	$ 6,800
Interest Payable	$ 250
Rent Payable	$ 500
Utilities Payable	$ 650
Wages payable	$ 1,800
Property taxes Payable	$ 1,000
Total Current Liabilities		$ 11,000
Long term Liabilities:
Long term notes payable		$ 25,000
Owner's Equity		$ 45,480
TOTAL LIABILITIES AND EQUITY		$ 81,480

The first year of the operation of the company shows a net loss due to higher amount of expense as compared to the lower revenues for the year. The balance sheet shows a higher amount if investment in assets due to the beginning of the operations.