a. Issued 200,000 shares of $5-par-value common stock for $1,000,000 in cash.
b. Borrowed $500,000 from the Oglesby National Bank and signed a 12% note due in two years.
c. Incurred and paid $380,000 in salaries for the year.
d. Purchased $640,000 of merchandise inventory on account during the year.
e. Sold inventory costing $580,000 for a total of $910,000, all on credit.
f. Paid rent of $110,000 on the sales facilities during the first 11 months of the year.
g. Purchased $150,000 of store equipment, paying $50,000 in cash and agreeing to pay the difference within 90 days.
h. Paid the entire $100,000 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 $36,000 during the year.
j. Collected $825,000 in cash from customers during the year for credit sales previously recorded.
k. At year-end, accrued $60,000 of interest on the note due to Oglesby National Bank.
l. At year-end, accrued $10,000 of past-due December rent on the sales facilities.
Kissick Income Statement
Cost of Goods Sold -580,000
Operating Income (Loss)
Interest Expense -60,000
Net Income (ignores taxes)
Kissick Balance Sheet
Total Current Assets
Equipment (problem ignores depreciation)
Interest Payable 60,000
Notes Payable (as a long term liability)
Total Current Liabilities
Long Term Debt/Bonds
Total Owners Equity
Total Liabilities and Owners Equity
This solution illustrates how to prepare an income statement and a balance sheet in good form.