Fundamentals of Financial Accounting
5th Edition
ISBN: 9780078025914
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 2, Problem 2.8E
Analyzing the Effects of Transactions in T-Accounts
Mulkeen Service Company, Inc. was incorporated by Conor Mulkeen and five other managers. The following activities occurred during the year:
- a. Received $60,000 cash from the managers; each was issued 1.000 shares of common slock.
- 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 year.
- d. 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. Equipment, Note Payable, and Common Stock. Beginning balances are zero. For each of the above transactions, record its effects in the appropriate T-accounts. Include 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 (d).
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,600 cash to
start the business and received 5,800 shares of common stock. The store completed its first year of operations on
December 31, current year. On that date, the following financial items for the year were determined: December 31,
current year, cash on hand and in the bank, $70,150; December 31, current year, amounts due from customers from
sales of books, $41,000; unused portion of store and office equipment, $78,000; December 31, current year, amounts
owed to publishers for books purchased, $13,800; one-year note payable to a local bank for $3,200. No dividends
were declared or paid to the stockholders during the year.
Required:
1. Complete the following balance sheet as of the end of the current year. Some information has been given
below.
2. What was the amount of net income for the year? (Hint: Use the retained earnings equation [Beginning Retained
Earnings + Net Income…
The following information is available
about the company. Provide a five-step
way to record this information so that it
can be used by managers:
1. Investment of the company's
shareholders in the amount of 1000
monetary units to establish a company
and deposit this amount in a current
account in a bank.
2. Purchase of land for 1,500 currency
units, half of which will be paid in cash and
the rest next year.
3- Purchasing equipment in the amount
of 140 monetary units in cash.
4. Buy 500 currency units (60% cash
and 40% credit).
5. Receive a loan in the amount of 90
monetary units from the bank and deposit
it in the current account.
Park & Company was recently formed with a $6,400 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,400 from a
local bank, purchased $1,140 of supplies on account, and also purchased $6,400 of equipment by paying $2,140 in cash and signing a promissory note for the balance.
Based on these transactions, the company's total assets are:
Multiple Choice
$9,800.
$15,200.
$12,800.
$11,940.
Chapter 2 Solutions
Fundamentals of Financial Accounting
Ch. 2 - Define the following: a. Asset b. Current asset c....Ch. 2 - Define a transaction anti give an example of each...Ch. 2 - For accounting purposes, what is an account?...Ch. 2 - What is the basic accounting equation?Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - What is a journal entry? What is the typical...Ch. 2 - What is a T-account? What is its purpose?Ch. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Which of the following is not an asset account? a....Ch. 2 - Which of the following statements describe...Ch. 2 - Total assets on a balance sheet prepared on any...Ch. 2 - The duality of effects can best be described as...Ch. 2 - The T-account is used to summarize which of the...Ch. 2 - Prob. 6MCCh. 2 - A company was recently formed with 50,000 cash...Ch. 2 - Which of the following statements would be...Ch. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Prob. 2.1MECh. 2 - Prob. 2.2MECh. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 2.4MECh. 2 - Prob. 2.5MECh. 2 - Prob. 2.6MECh. 2 - Prob. 2.7MECh. 2 - Identifying Events as Accounting Transactions Half...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Preparing Journal Entries For each of the...Ch. 2 - Posting to T-Accounts For each of the transactions...Ch. 2 - Reporting a Classified Balance Sheet Given the...Ch. 2 - Prob. 2.13MECh. 2 - Prob. 2.14MECh. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 2.16MECh. 2 - Prob. 2.17MECh. 2 - Prob. 2.18MECh. 2 - Prob. 2.19MECh. 2 - Prob. 2.20MECh. 2 - Prob. 2.21MECh. 2 - Prob. 2.22MECh. 2 - Prob. 2.23MECh. 2 - Prob. 2.24MECh. 2 - Prob. 2.25MECh. 2 - Prob. 2.1ECh. 2 - Prob. 2.2ECh. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Prob. 2.5ECh. 2 - Recording Journal Entries Refer to E2-4. Required:...Ch. 2 - Prob. 2.7ECh. 2 - Analyzing the Effects of Transactions in...Ch. 2 - Inferring Investing and Financing Transactions and...Ch. 2 - Analyzing Accounting Equation Effects, Recording...Ch. 2 - Recording Journal Entries and Preparing a...Ch. 2 - Analyzing the Effects of Transactions Using...Ch. 2 - Explaining the Effects of Transactions on Balance...Ch. 2 - Prob. 2.14ECh. 2 - Prob. 2.15ECh. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Recording Transactions (in a Journal and...Ch. 2 - Determining Financial Statement Effects of Various...Ch. 2 - Prob. 2.2PBCh. 2 - Prob. 2.3PBCh. 2 - Prob. 2.1SDCCh. 2 - Prob. 2.2SDCCh. 2 - Prob. 2.4SDCCh. 2 - Prob. 2.5SDCCh. 2 - Accounting for the Establishment of a Business...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- The following are the transactions of Spotlighter, Incorporated, for the month of January. a. Borrowed $4,390 from a local bank on a note due in six months. b. Received $5,080 cash from investors and issued common stock to them. c. Purchased $1,900 in equipment, paying $650 cash and promising the rest on a note due in one year. d. Paid $750 cash for supplies. e. Bought and received $1,150 of supplies on account. Required: Post the effects to the appropriate T-accounts and determine ending account balances. Show a beginni Debit Beginning Balance Ending Balance Debit F Cash Equipment Credit Credit Debit Beginning Balance Ending Balance Debit Supplies Accounts Payablearrow_forwardThe transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $8,200. b. The firm borrowed $5,000 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,750 were purchased for cash. The original list price of the equipment was $1,970, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,350 was paid for the first month's rent. e. Inventory of $15,800 was purchased; $9,900 cash was paid to the suppliers, and the balance will be paid within 60 days. f. During the first week of operations, merchandise that had cost $4,500 was sold for $5,900 cash. g. A newspaper ad costing $130 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $4,300 was purchased; cash of $1,200 was paid, and the…arrow_forwardJournalize the following: 1. On the books & records of Company A: On May 2nd, Company A received $100 of interest income from the bank earned in April. If the books are on an accrual basis, record the entry in April and in May when cash was received April                                                                                      May  2. On the books & records of Company A: In January, Company A purchased Investment in XYZ for $100. Payment was made in cash. In March, Company A sold Investment in XYZ for $150. Payment was received in cash.   3. On the books & records of Company A: On April 1st, Company A paid $1,200 for insurance expense that covers the year 4/1/17-3/31/18. Record 4/1/17 entry for payment of $1,200 Record 4/30/17 journal entry   4. There are 2 parallel funds, Fund A and Fund B. Together, the funds will make an investment of $100k, with a 65/35 split. The investment will be paid in cash, however, Fund B does not currently have any cash so Fund…arrow_forward
- Sanchez Company engaged in the following transactions during Year 1: 1) Started the business by issuing $45,200 of common stock for cash. 2) The company paid cash to purchase $28,000 of Inventory. 3) The company sold inventory that cost $17,600 for $34,600 cash. 4) Operating expenses incurred and paid during the year, $15,600. Sanchez Company engaged in the following transactions during Year 2: 1) The company paid cash to purchase $38,400 of inventory. 2) The company sold inventory that cost $34,400 for $61,000 cash. 3) Operating expenses incurred and paid during the year, $19,600. Note: Sanchez uses the perpetual inventory system. What is the amount of retained earnings that will be shown on the balance sheet at December 31, Year 2? Multiple Choice $7,000arrow_forwardDuring its first year of operations, a company entered into the following transactions: • Borrowed $5,150 from the bank by signing a promissory note. • Issued stock to owners for $11,500. • Purchased $1,150 of supplies on account. Paid $550 to suppliers as payment on account for the supplies purchased. What is the amount of total assets at the end of the year? Multiple Choice O O $17,250 $17,800 $5,750 $16,650arrow_forwardBrown Consulting Services organized as a corporation on January 18 and engaged in the followingtransactions during its first two weeks of operation:Jan. 18 Issued capital stock in exchange for $30,000 cash.Jan. 22 Borrowed $20,000 from its bank by issuing a note payable.Jan. 23 Paid $100 for a radio advertisement aired on January 24.Jan. 25 Provided $1,000 of services to clients for cash.Jan. 26 Provided $2,000 of services to clients on account.Jan. 31 Collected $800 cash from clients for the services provided on January 26.a. Record each of these transactions. b. Determine the balance in the Cash account on January 31. Be certain to state whether the bal-ance is debit or credit.arrow_forward
- The transactions relating to the formation of Blue Company Stores Incorporated, and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $7,400. b. The firm borrowed $5,900 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,600 were purchased for cash. The original list price of the equipment was $1,930, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,500 was paid for the first month's rent. e. Inventory of $14,700 was purchased; $8,500 cash was paid to the suppliers, and the balance will be paid within 60 days. f. During the first week of operations, merchandise that had cost $3,100 was sold for $5,100 cash. g. A newspaper ad costing $100 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $4,350 was purchased; cash of $1,100 was paid,…arrow_forwardThe transactions relating to the formation of Blue Company Stores Incorporated, and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $7,400. b. The firm borrowed $5,900 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,600 were purchased for cash. The original list price of the equipment was $1,930, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,500 was paid for the first month's rent. e. Inventory of $14,700 was purchased; $8,500 cash was paid to the suppliers, and the balance will be paid within 60 days. f. During the first week of operations, merchandise that had cost $3,100 was sold for $5,100 cash. g. A newspaper ad costing $100 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $4,350 was purchased; cash of $1,100 was paid,…arrow_forwardDetermine the dollar effect on the accounting equation (increase or decrease assets, liabilities, or stockholders’ equity) from the following separate transactions. a. Dillon contributes $4,000 of cash to his corporation in exchange for common stock. b. Cowboy Corporation purchases equipment with a 10-year note payable for $1,600. c. Queen Bee pays off $1,300 of accounts payable.arrow_forward
- Grady Service Company Inc. was organized by Chris Grady and five other investors. The following events occurred during the year:   a. Received $68,400 cash from the investors; each was issued 1,520 shares. b. Purchased equipment for use in the business at a cost of $18,400; one-fourth was paid in cash, and the company signed a note for the balance, payable in six months. c. Signed an agreement with a cleaning service to pay it $320 per week for cleaning the corporate offices. d. Lent $3,700 to one of the investors, who signed a note due in six months. e. Issued shares to additional investors, who contributed $7,200 in cash and a lot of land valued at $16,200. f. Paid the amount of the note payable in (b). g. Conor Mulkeen borrowed $11,200 for personal use from a local bank and signed a note payable in one year.     Required: 1. Prepare journal entries for each transaction. (If no entry is required for a transaction/event, select "No journal…arrow_forwardThe transactions relating to the formation of Blue Company Stores Incorporated, and its first month of operations follow. a. The firm was organized and the stockholders invested cash of $7,600. b. The firm borrowed $5,400 from the bank; a short-term note was signed. c. Display cases and other store equipment costing $1,700 were purchased for cash. The original list price of the equipment was $1,900, but a discount was received because the seller was having a sale. d. A store location was rented, and $1,400 was paid for the first month's rent. e. Inventory of $15,200 was purchased; $9,000 cash was paid to the suppliers, and the balance will be paid within 45 days. f. During the first week of operations, merchandise that had cost $3,300 was sold for $7,000 cash. g. A newspaper ad costing $150 was arranged for; it ran during the second week of the store's operations. The ad will be paid for in the next month. h. Additional inventory costing $4,100 was purchased; cash of $1,250 was paid,…arrow_forwardPark & Company was recently formed with a $6,000 investment in the company by stockholders in exchange for common stock. The company then borrowed $3,000 from a local bank, purchased $1,100 of supplies on account, and also purchased $6,000 of equipment by paying $2,100 in cash and signing a promissory note for the balance. Based on these transactions, the company's total assets arearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
The accounting cycle; Author: Alanis Business academy;https://www.youtube.com/watch?v=XTspj8CtzPk;License: Standard YouTube License, CC-BY