Questions 5-7 (of 10) The following information applies to the questions displey

Question

Questions 5-7 (of 10) The following information applies to the questions displeyed below/ Mulkeen Service Company, Inc. was incorporated by Conor Mulkeen and five other manegers. The tollowing actvtes occurred during the yeer a. Recelved $74,000 cash from the managers; each was issued 2.200 shares of common stock b. Purchased equlpment for use in the business at a cost of $16.200. one-fourth was paid in cash and the company signed a note for the belance (due in six months signed an agreement with a cleaning service to pay it $135 per week for cleaning the corporate oleer beginning next year. d. Conor Muikeen borrowed $28,000 for personal use from a local bank, signing a one year note value 10.00 points Required: 1. For each of the above transactions, record its effects in the appropriate T-accounts Assume all beginning balances are zero Cash Bal Beg Bal End Bal End Bal Note Payable Common Stock Beg Bal Beg Bal. End Ba End Bal

Explanation / Answer

a. Common stock

Cash

Equipment

Notes payable

b. Assets $86150 = liabilities $12150 + stockholder's equity $ 74000

c. The agreement in (C) involves no exchange or receipt of cash , goods or services and thus is not yet a transaction. It involves no liabilities in current year

d. Transaction (d) occurs between the owner and the other ,the separate entity assumption implies this transaction does not affect the business , business transaction should be recorded separately from its owner

To Balance c/d 74000 By Cash 74000

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