Mulkeen Service Company, Inc., was organized by Conor Mulkeen and five other investors. The following activities occurred
Question:
Mulkeen Service Company, Inc., was organized by Conor Mulkeen and five other investors. The following activities occurred during the year:
a. Received $60,000 cash from the investors; each was issued 1.000 shares of capital stock.
b. Purchased equipment for use in the business at a cost of 512,000; 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.
d. Lent $2,000 to one of the investors who signed a note due in six months.
e. Received an additional contribution from investors who provided $4,000 in cash and land valued at $10,000 in exchange for stock in the company.
/. 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, Note Receivable, Equipment. Land. Note Payable, and Contributed Capital. Beginning balances are zero. For each of the preceding transactions, record the effects of the transaction in the appropriate T-accounts. Include good referencing and totals for each T-account. 2. Using the balances in the T-accounts, fill in the following amounts for the accounting equation:
3. Explain your response to Events
(c) and (/).
Step by Step Answer:
