III
1. A. K. Sutton is proprietor of hardware store. On June 30, 19—, he has the following assets and liabilities:
- Bank deposits $1,980.47.
- Notes receivable $450.
- Accounts due from customers:
- L. M. Taylor $190.
- L. K. Jones $275.
- G. Sanford $18.73.
- F. Daly $87.54.
- C. Baker $103.13.
- Merchandise inventory $4,745.
- Office equipment $135.
- Delivery equipment $575.
- He owes:
- First National Bank $565.
- Chas. Goodwin $487.97.
- L. Birch $150.
- H. Tuttle $92.50.
- James Bros. $325.
Sutton’s 60-day promissory note for $200 with interest at 6% is due today, but payment is deferred, with consent of the creditor, to tomorrow morning.
On the above date Sutton buys out the automobile accessory business of his neighbor, A. M. Lawrence, and combines it with his own. The deal was completed on the basis of the balance sheet submitted below, except that Lawrence is to retain the cash. Sutton pays Lawrence in cash from his hardware business. Lawrence’s balance sheet contains the following items:
- Cash $347.90.
- Accounts receivable:
- Taxi Service, Inc. $49.50.
- The Market Shops $18.50.
- Whitney’s Delivery Service $80.
- Merchandise inventory $1,597.
- Delivery equipment $475.
- Office equipment $90.
- Accounts payable $850.
Draw up a balance sheet to show Sutton’s condition after his purchase of Lawrence’s business.
Why is Sutton’s net worth the same as before buying Lawrence’s business?
Instructions
Show accounts receivable and accounts payable as totals, with a supplementary schedule listing each separately.