FUNDAMENTALS OF FINANCIAL ACCOUNTING
6th Edition
ISBN: 9781260664386
Author: PHILLIPS, LIBB
Publisher: MCG
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Chapter 2, Problem 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).
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Bennett Griffin and Chula Garza organized Cole Valley Book Store as a corporation; each contributed $71,600 cash to
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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.
Following are the transactions of JonesSpa Corporation, for the month of January.
a. Borrowed $30,000 from a local bank; the loan is due in 9 months.
b. Lent $10,000 to an affiliate; accepted a note due in one year.
c. Sold to investors 100 additional shares of stock with a par value of $0.10 per share and a market price of $5 per share;
received cash.
d. Purchased $15,000 of equipment, paying $5,000 cash and signing a note for the rest due in one year.
e. Declared $2,000 in cash dividends to stockholders, to be paid in February.
For each of the above transactions, indicate the accounts and amounts. A sample is provided.
Note: Enter decreases to an element of the balance sheet with a minus sign.
a. Cash
b. Notes receivable
b.
C.
C.
d.
d.
e.
e.
Assets
Accounts payable
Accounts receivable
Accrued liabilities payable
Additional paid-in-capital
30,000 = Notes payable
10,000 =
=
=
=
=
=
=
Liabilities
30,000 +
+
+
+
+
+
+
+
+
Stockholders' Equity
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. 1MECh. 2 - Prob. 2MECh. 2 - Matching Terms with Definitions Match each term...Ch. 2 - Prob. 4MECh. 2 - Prob. 5MECh. 2 - Prob. 6MECh. 2 - Prob. 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. 13MECh. 2 - Prob. 14MECh. 2 - Identifying Transactions and Preparing Journal...Ch. 2 - Prob. 16MECh. 2 - Prob. 17MECh. 2 - Prob. 18MECh. 2 - Prob. 19MECh. 2 - Prob. 20MECh. 2 - Prob. 21MECh. 2 - Prob. 22MECh. 2 - Prob. 23MECh. 2 - Prob. 24MECh. 2 - Prob. 25MECh. 2 - Prob. 1ECh. 2 - Identifying Account Titles The following are...Ch. 2 - Classifying Accounts and Their Usual Balances As...Ch. 2 - Determining Financial Statement Effects of Several...Ch. 2 - Recording Journal Entries Refer to E2-4. Required:...Ch. 2 - Prob. 6ECh. 2 - Recording Journal Entries Refer to E2-6. Required:...Ch. 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 - Calculating and Evaluating the Current Ratio...Ch. 2 - Prob. 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 - Prob. 1PACh. 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. 2PBCh. 2 - Recording Transactions (in a Journal and...Ch. 2 - Finding and Analyzing Financial Information Refer...Ch. 2 - Finding and Analyzing Financial Information Refer...Ch. 2 - Prob. 4SDCCh. 2 - Prob. 5SDCCh. 2 - Accounting for the Establishment of a Business...
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