On November 15, 19—, John Henry and James Raymond form a partnership to carry on a retail grocery business. Losses and gains are to be shared equally. Each partner is to be allowed a salary of $150 per month.
Henry invests the following assets from a business of which he has been sole owner:
Cash $150; notes receivable $570; accounts receivable $7,320; merchandise $24,360; furniture and fixtures $4,230.
The partnership also assumes the following liabilities for Henry:
Notes payable $3,000; accounts payable $8,815.
Raymond invests these assets: Cash $5,500; furniture and fixtures $2,500; building $17,000.
2. At various times the following transactions of the partnership occur. Record them in the journal with full explanation.
| Nov. | |
| 20. | Returned goods to Austin Nichols & Co. $215; |
| to Bronx Sugar Co. $65; | |
| to Continental Food Products Co. $87.50. | |
| 22. | Received 30-day 6% note of J. D. Jordan for $75. |
| Accepted draft of Armour & Co., 60 days from sight, | |
| in favor of the American Live Stock Co., $127.50. | |
| 24. | Goods sold during previous week were returned by |
| Franklin K. Adams $25; Eugene Alread $35; | |
| Preston Freeman $16.50. | |
| 26. | The partners gave their 90-day 6% note to Swift & Company, |
| payable at the store, for $725. | |
| 28. | Investigation upon a complaint from James Ortner, |
| a customer, showed that a sale of $150 to George | |
| Ortner had been charged to the former in error. | |
| Dec. | |
| 8. | Made Joseph Horowitz, a customer, an allowance of $25 |
| on account of dissatisfaction with a recent purchase. | |
| 10. | Sold bill of goods $425.50, to Ben. B. Brady, receiving |
| cash $125.50, and J. S. Gordon’s 60-day acceptance | |
| for the balance. | |
| 20. | Purchased a plot of ground for $4,000 from the |
| Bond & Mortgage Co., paying $1,000 cash and | |
| executing a mortgage for the balance. | |
3. The following particulars relating to [Problem 4, Assignment XX], must be taken into account to show the true condition of the Port Bedford Terminal Co. as on December 31, 19—:
- Materials and supplies on hand $68,894.
- Depreciation for the period:
- On real estate, wharves, and warehouses $308,401.
- On terminal railway $22,581.
- On marine equipment $16,714.
- On machinery and electric plant $4,978.
- Estimate of uncollectible accounts $10,000.
- Interest accrued on Liberty bonds $21,488.
- Accrued maintenance of property $25,980.
- Accrued selling and service costs $16,460.
- Accrued rents on warehouses $50,000.
- Accrued rents on piers $30,000.
- Taxes payable $50,000.
- Warehouse rents prepaid $20,000.
- (a) Draw up a balance sheet for December 31, 19—.
- (b) Draw up a statement of profit and loss for the
- twelve months’ period ending December 31, 19—.
Instructions