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.
Required:
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 Summary
Excel spreadsheet attached looks at the T-Accounts for Mulkeen company.
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Dear student,
1 Solution to your problem is provided in a separate excel file attached herewith.
2 Analysis of ...
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