Explore BrainMass

Explore BrainMass

    Accounting

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    E2-8 Analyzing the Effects of Transactions in T-Accounts: L02, L03, L05

    Mulkeen Service Company, Inc., was organized by Conor Mulkeen and five other investors. The following activities occurred during the year:
    0.Received $60,000 cash from the investors; each was issued 1,000 shares of capital stock.
    1.Purchased equipment for use in the business at a cost of $12,000; one-fourth was paid in cash and the company signed a note for the balance (due in six months).
    2.Signed an agreement with a cleaning service to pay it $120 per week for cleaning the corporate offices, beginning next week.
    3.Lent $2,000 to one of the investors who signed a note due in six months.
    4.Conor Mulkeen borrowed $10,000 for personal use from a local bank, signing a one-year note.
    Required:
    0.Create T-accounts for the following accounts: Cash, Notes Receivable, Equipment, Notes Payable, and Contributed Capital. Beginning balances are zero. For each of the above transactions, record its effects in the appropriate T-accounts. Include good referencing and totals for each T-account.
    1.Using the balances in the T-accounts, fill in the following amounts for the accounting equation: Assets $___ = Liabilities $___ + Stockholders' Equity $___
    2.Explain your response to events c and e.

    E2-9 Inferring Investing and Financing Transactions and Preparing a Balance Sheet: L02, L04, L05

    During its first week of operations, January 1-7, 2006, Faith's Fine Furniture Corporation completed six transactions with the dollar effects indicated in the following schedule:

    Dollar Effect of Each of the Six Transactions
    Accounts 1 2 3 4 5 6 Ending Bal
    Cash 12,000 $50,000 $(4,000) $4,000 $(7,000)
    Equipment 7,000
    Land 12,000 $3,000 
    Long-term Debt $50,000 8,000 4,000 3,000  
    ContributedCapital 12,000  
     
      
    Required:
    0.Write a brief explanation of transactions 1 through 6. Explain any assumptions that you made.
    1.Compute the ending balance in each account and prepare a classified balance sheet for Faith's Fine Furniture Company on January 7, 2006.
    2.As of January 7, 2006, has most of the financing for Faith's investment in assets come from liabilities or stockholders' equity?

    E2-10 Inferring Investing and Financing Transactions and Preparing a Balance Sheet: L02, L04, L05
    During its first month of operations, March 2006, Faye's Fashions, Inc., completed four transactions with the dollar effects indicated in the following schedule:

       Dollar Effect of Each of the Six Transactions
    Accounts 1 2 3 4 Ending Balance
    Cash 501,000 $(4,000) 5,000 $(4,000)
    Computer Equipment 4,000
    Delivery Truck 25,000
    Long-term Notes Payable 21,000
    Contributed Capital 12,000

    Required:
    0.Write a brief explanation of transactions 1 through
    1.Explain any assumptions that you made.
    2.Compute the ending balance in each account and prepare a classified balance sheet for Faye's Fashions, Inc., at the end of March 2006.
    3.As of March 31, 2006, has most of the financing for Faye's investment in assets come from liabilities or stockholders' equity?

    © BrainMass Inc. brainmass.com June 3, 2020, 10:49 pm ad1c9bdddf
    https://brainmass.com/business/accounting/accounting-251083

    Solution Summary

    The solution explains some accounting questions.

    $2.19

    ADVERTISEMENT