Reference no: EM132902516

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

• Issued 198,000 shares of $6-par-value common stock for $1,188,000 in cash.
• Borrowed $520,000 from Oglesby National Bank and signed a 10% note due in three years.
• Incurred and paid $410,000 in salaries for the year.
• Purchased $660,000 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 $170,000 of store equipment, paying $53,000 in cash and agreeing to pay the difference within 90 days.
• Paid the entire $117,000 owed for store equipment and $610,000 of the amount due to suppliers for credit purchases previously recorded.
• Incurred and paid utilities expense of $37,000 during the year.
• Collected $855,000 in cash from customers during the year for credit sales previously recorded.
• At year-end, accrued $52,000 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:

Problem 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.)