Chapter 2, Problem 37E

Exercise 2-37 Events and Transactions

Several events are listed below

1. Common stock is issued to investors.
2. An agreement is signed with a janitorial service to provide cleaning services over the next 12 months.
3. Inventory is purchased.
4. Inventory is sold to customers.
5. Two investors sell their common stock to another investor.
6. A 2-year insurance policy is purchased

Required:

1. CONCEPTUAL CONNECTION For each of the events1 identify which ones qualify for recognition in the financial statements.
2. CONCEPTUAL CONNECTION For events that do not qualify for recognition, explain your reasoning.