6. Using your own data for a purchase ledger in which there are at least six open accounts, show the entries necessary to close it and open a voucher register to take its place.
Instructions
See Chapter II where all these points are discussed.
IV
Problem
Caxton & Dolton began business January 1, 1916. Caxton invested $12,000, and Dolton invested $11,000. May 1, 1916, Caxton withdrew $3,000, and Dolton invested $1,000. July 1, 1917, Evans was admitted to the partnership, investing $8,000. October 1, 1917, Evans invested $4,000 more, and Dolton withdrew $2,000. July 1, 1918, Dolton and Evans purchased Caxton’s interest in the business. On that date their books showed the following financial condition: cash $19,364.50; merchandise $17,500; notes receivable $10,000; accounts receivable $8,945; interest receivable $248.50; real estate $6,500; accounts payable $14,000; notes payable $5,130; interest payable $167.40; accrued expenses $325.60. For the purpose of the sale good-will was estimated at $5,000; depreciation on real estate 5%; bad debts at 3% of the outstanding notes and accounts. Each partner was to share in profits on the basis of capital and the length of time the capital was invested. Of the purchase price of Caxton’s share, Dolton and Evans were to pay such amounts respectively as would make their new capitals equal. Set up the partners’ ledger accounts and show all entries to them in order to take effect of all the above data.
Instructions
For explanation of this method of sharing profits, see Volume I, pages 281-284.
V
Practice Data