The options for the middle rows edges: E2-8 Analyzing the Effects of Transaction
ID: 2524341 • Letter: T
Question
The options for the middle rows edges: E2-8 Analyzing the Effects of Transactions in T-Accounts [LO 2-2, LO 2-3, LO 2-5] The following information applies to the questions displayed below. Mulkeen Service Company, Inc. was incorporated by Conor Mulkeen and five other managers. The following activities occurred during the year: a. Received $48,000 cash from the managers; each was issued 1.200 shares of common stock. b. Purchased equipment for use in the business at a cost of $8,400, one-fourth was paid in cash and the company signed a note for the balance (due in six months). c. Signed an agreement with a cleaning service to pay it $70 per week for cleaning the corporate offices, beginning next year d. Conor Mulkeen borrowed $15,000 for personal use from a local bank, signing a one-year note.Explanation / Answer
1) Cash (Amounts in $)
Equipment (Amounts in $)
Note Payable (Amounts in $)
Common Stock (Amounts in $)
Working Notes:-
1) The point c transaction will not be recorded in the ledgers in current year because only agreement is entered and the accrual of expenses is also from the beginning of next year.
2) The amount of personal borrowing by the manager will not be recorded in any ledger.
Beg. Bal. 0 a. (Common Stock) 48,000 2,100 b. (Equipment) ($8,400*1/4) End. Bal. 45,900