Question

 

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 200,000 shares of $7-par-value common stock for $1,400,000 in cash.

Borrowed $550,000 from Oglesby National Bank and signed a 11% note due in two years.

Incurred and paid $440,000 in salaries for the year.

Purchased $640,000 of merchandise inventory on account during the year.

Sold inventory costing $640,000 for a total of $940,000, all on credit.

Paid rent of $330,000 on the sales facilities during the first 11 months of the year.

Purchased $130,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days.

Paid the entire $79,000 owed for store equipment and $590,000 of the amount due to suppliers for credit purchases previously recorded.

Incurred and paid utilities expense of $45,000 during the year.

Collected $835,000 in cash from customers during the year for credit sales previously recorded.

At year-end, accrued $60,500 of interest on the note due to Oglesby National Bank.

At year-end, accrued $30,000 of past-due December rent on the sales facilities.

5.

value:
2.50 points

Required information

Required:

Record each transaction in the appropriate columns. (If an transaction/Adjustment are not affecting the balance sheet category or income statment, leave the cells blank. Enter decreases to account balances as as negative.)

(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Answer 1

Kissick Company
Journal entries
Event	General Journal	Debit	Credit
1	Cash	1,400,000
	Common stock		1,400,000
	(To record issued 200,000 shares of $7-par-value common stock for $1,400,000 in cash.)
2	Cash	550,000
	Notes payable		550,000
	(To record Borrowed cash through signing notes payable.)
3	Salaries expense	440,000
	Cash		440,000
	(To record salaries expense paid.)
4	Merchandise Inventory	640,000
	Account payable		640,000
	(To record purchase of inventory on account.)
5	Account receivable	940,000
	Sales revenue		940000
	(To record sales revenue on account.)
5	Cost of goods sold	640,000
	Merchandise Inventory		640,000
	(To record cost of goods sold.)
6	Rent expense	330,000
	Cash		330,000
	(To record rent expense paid.)
7	Equipment	130000
	Cash		51000
	Account payable		79000
	(To record purchase of equipment on cash.)
8	Account payable	79000
	Cash		79000
	(To record payment made to account payable.)
8	Account payable	590,000
	Cash		590000
	(To record payment made to account payable.)
9	Utilities expense	45,000
	Cash		45,000
	(To record Utilities expense paid.)
10	Cash	835,000
	Account receivable		835,000
	(To record cash collected from account receivable.)
11	Interest expense	60,500
	Interest payable		60,500
	(To record accrued interest expense.)
12	Rent expense	30,000
	Accrued Expenses (Rent Payable)		30000
	(To record accrued rent expense.)