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    Analyzing the Effects of Transactions in T-Accounts

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    Mulkeen Service Company, Inc., was organized by Conor Mulkeen and five other investors. The
    following activities occurred during the year:
    a. Received $60,000 cash from the investors; each was issued 1,000 shares of capital stock.
    b. 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).
    c. Signed an agreement with a cleaning service to pay it $120 per week for cleaning the
    corporate offices, beginning next week.
    d. Lent $2,000 to one of the investors who signed a note due in six months.
    e. Conor Mulkeen borrowed $10,000 for personal use from a local bank, signing a one-year note.
    1. 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.
    2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:
    Assets $  Liabilities $  Stockholders' Equity $
    3. Explain your response to events c and e.

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    Solution Preview

    Dear student,

    1 Solution to your problem is provided in a separate excel file attached herewith.

    2 Analysis of ...

    Solution Summary

    Excel spreadsheet attached looks at the T-Accounts for Mulkeen company.