[The following information applies to the questions displayed below.] Use the ho
ID: 2562006 • Letter: #
Question
[The following information applies to the questions displayed below.]
Use the horizontal model, or write the journal entry, for each of the following transactions and adjustments that occurred during the first year of operations at Kissick Co.
Issued 260,000 shares of $7-par-value common stock for $1,820,000 in cash.
Borrowed $560,000 from Oglesby National Bank and signed a 11% note due in two years.
Incurred and paid $400,000 in salaries for the year.
Purchased $660,000 of merchandise inventory on account during the year.
Sold inventory costing $610,000 for a total of $970,000, all on credit.
Paid rent of $220,000 on the sales facilities during the first 11 months of the year.
Purchased $150,000 of store equipment, paying $54,000 in cash and agreeing to pay the difference within 90 days.
Paid the entire $96,000 owed for store equipment and $610,000 of the amount due to suppliers for credit purchases previously recorded.
Incurred and paid utilities expense of $45,000 during the year.
Collected $825,000 in cash from customers during the year for credit sales previously recorded.
At year-end, accrued $61,600 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.
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Explanation / Answer
Transaction
Assets
=
Liabilities
+
Stockholders Equity
Income Statement
Cash
+
Accounts Receivable
+
Inventory
+
Equipment
=
Notes Payable
+
Accounts Payable
+
Common Stock
Net Income
=
Income
-
Expenses
a
1820000
1820000
b
560000
560000
c
-400000
-400000
d
660000
660000
e
970000
970000
-610000
-610000
f
-220000
-220000
g
-54000
150000
h
-96000
96000
-610000
-610000
i
-45000
-45000
j
825000
-825000
k
61600
-61600
l
20000
-20000
Transaction
Assets
=
Liabilities
+
Stockholders Equity
Income Statement
Cash
+
Accounts Receivable
+
Inventory
+
Equipment
=
Notes Payable
+
Accounts Payable
+
Common Stock
Net Income
=
Income
-
Expenses
a
1820000
1820000
b
560000
560000
c
-400000
-400000
d
660000
660000
e
970000
970000
-610000
-610000
f
-220000
-220000
g
-54000
150000
h
-96000
96000
-610000
-610000
i
-45000
-45000
j
825000
-825000
k
61600
-61600
l
20000
-20000
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