Corporation—Opening the Books
4. C, D, and E are partners sharing profits in accordance with capital investments. At end of the fiscal year, after all nominal accounts are closed, the books show the following:
| Cash | $ 20,051.00 | |
| Plant | 60,422.00 | |
| Inventory of Merchandise | 41,300.00 | |
| Bills Receivable | 18,028.00 | |
| Book Accounts Receivable | 70,402.00 | |
| C, Drawings | 8,400.00 | |
| D, Drawings | 6,000.00 | |
| E, Drawings | 4,800.00 | |
| Bills Payable | $ 5,211.00 | |
| C, Capital | 100,000.00 | |
| D, Capital | 50,000.00 | |
| E, Capital | 50,000.00 | |
| Profit and Loss, Undivided Profits | 24,192.00 | |
| $229,403.00 | $229,403.00 |
The partners thereupon incorporate a company with an authorized capital of $250,000. The company so formed purchased the partnership assets and good-will, not including the cash, for $250,000, payable $200,000 in stock and $50,000 in cash, the last-mentioned cash being the proceeds of sale of stock to F.
It is the intention to divide the purchase-money stock among the vendors in proportion to their former capital and to adjust their accounts by the division of the cash shown in trial balance, which will then be placed to their credit as loans to the company at 6% interest and remain as working capital. The bills payable are to be settled by the partners. As the drawings of the partners are not in proportion to their respective shares in the profits, the partners are charged with the interest thereon in the following amounts, viz.: C $231, D $165, and E $132.
(a) Frame the necessary entries to close the partnership books and show the amount of cash received by each partner.
(b) Referring to question (a), frame the necessary entries to open the books of the company and prepare a balance sheet showing the condition of the company at the beginning of its operations.
5. The Frost Manufacturing Co. was incorporated April 10, 1918, with a capital stock of $200,000, divided into 2,000 shares of a par value of $100 each.
Payments were made on this date as indicated in the following subscription register:
| Subscriber | No. Shares | Amount | Form of Payment |
| C. Dunn | 100 | $10,000.00 | Cash |
| E. Ferris | 200 | 20,000.00 | Cash |
| G. Hall | 400 | 40,000.00 | Cash $10,000, and Hall's note with interest at 6%, due in one year, the balance. |
April 12. Expenses of $1,200 incidental to the organization of the corporation were paid in cash.
April 15. The corporation purchased J. King’s entire plant valued at $170,000 and assumed his liabilities amounting to $70,000, giving in full payment 1,200 shares of stock at par.
April 20. S. Samson subscribed for 50 shares of stock and paid an instalment of $30 per share in cash.
April 22. To provide working capital, each of the following stockholders donated 1/10 of his shares of stock: Dunn, Ferris, Hall, and King.
April 25. Cash was received for 100 shares of donated stock sold at 85.
April 27. Samson gave his note due in six months for the balance due on his stock subscription.
April 28. The directors authorized an issue of $50,000 in bonds, with interest at 5%, to mature in 20 years.
April 30. Bonds having a par value of $30,000 were sold for $28,000 in cash.
(a) Write journal entries to record fully all the above information in the financial books of the corporation.
(b) Prepare the corporation balance sheet for April 30, 1918.