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.

A. Issued 220,000 shares of $6-par-value common stock for $1,320,000 in cash.

B. Borrowed $540,000 from Oglesby National Bank and signed a 14% note due in two years.

C. Incurred and paid $420,000 in salaries for the year.

D. Purchased $710,000 of merchandise inventory on account during the year.

E. Sold inventory costing $660,000 for a total of $990,000, all on credit.

F. Paid rent of $220,000 on the sales facilities during the first 11 months of the year.

G. Purchased $140,000 of store equipment, paying $51,000 in cash and agreeing to pay the difference within 90 days.

H. Paid the entire $89,000 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 $43,000 during the year.

J. Collected $825,000 in cash from customers during the year for credit sales previously recorded.

K. At year-end, accrued $75,600 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.

Answer 1

Journal Entries
No	Accounting titles & Explanations				Debit	Credit
A	Cash				1,320,000
	common stock					1,320,000
B	Cash				540,000
	Notes payable					540,000
C	Salary expense				420,000
	cash					420,000
D	Merchandise inventory				710,000
	Accounts payable					710,000
E	cost of goods sold				660,000
	merchandise inventory					660,000
	Accounts receivable				990,000
	sales					990,000
F	Prepaid rent				220,000
	cash					220,000
G	Store Equipment				140,000
	cash					51,000
	Accounts payable					89,000
H	Accounts payable				709000
	cash					709,000
I	Utility expense				43,000
	cash					43,000
J	Cash				825,000
	Accounts receivabe					825,000
K	Interest expense				75,600
	interest payable					75,600
L	Rent expense				20,000
	Prepaid rent					20,000