Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information E 2 - 8 ( Algo ) Analyzing the Effects of Transactions in T - Accounts [ LO 2 - 2 , LO

Required information
E2-8(Algo) Analyzing the Effects of Transactions in T-Accounts [LO 2-2, LO 2-3, LO 2-5]
[The following information applies to the questions displayed below.]
Mulkeen Service Company, Incorporated, was incorporated by Conor Mulkeen and five other managers. The following
activities occurred during the year:
a. Received $44,000 cash from the managers; each was issued 1,200 shares of common stock.
b. Purchased equipment for use in the business at a cost of $7,200; 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 $60 per week for cleaning the corporate offices, beginning next
year.
d. Conor Mulkeen borrowed $13,000 for personal use from a local bank, signing a one-year note.
E2-8(Algo) Part 3
3-a. What will be your response to transaction (c)?
The agreement in (c) involves no exchange or receipt of cash, goods, or services and thus is not yet a transaction.
The agreement in (c) involves exchange of cash and services and thus is a transaction.
3-b. What will be your response to transaction (d)?
Transaction (d) occurs between the company and others, so this transaction affect the business.
Transaction (d) occurs between the owners and others, the separate entity assumption implies this transaction does not affect
the business.
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Auditing

Authors: Michael C. Knapp

11th edition

1305970810, 9781337514811, 1337514810, 978-1305970816

More Books

Students also viewed these Accounting questions

Question

Explain the multicultural organization development (MCOD) process.

Answered: 1 week ago