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 $ 180,0.

1. 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

2. 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

3. $ 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

4. 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

5. 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

6. 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

7. $ (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

8. $ 1,301,000.00