Other sources yielded this information: stock of goods on hand inventoried at $5,641; horses and wagons estimated as worth $730; store fixtures $1,114; rent of store building unpaid $300; clerks’ salaries unpaid $84; notes receivable $2,300; notes payable outstanding (non-interest bearing) $2,400. Bill of goods received from Stone Bros., which has been included in the inventory but which has not been entered in Stone Bros.’ account, $193; interest accrued on notes receivable $16; cash in the bank and safe $1,724.
It was found that the following information was available for determining his financial condition as at the close of the preceding fiscal year, June 30, 1912: cash $1,478; notes receivable $500; notes payable $800; Howe’s capital $4,000; store fixtures $900; inventory of goods in stock $2,800; horses and wagons at an estimated value of $800; customers’ accounts total $2,314; creditors’ accounts total $3,609.
From the foregoing prepare:
(a) Statement of financial condition of Thomas J. Howe as of June 30, 1913.
(b) Statement showing the amount of profit made or loss sustained for the fiscal year ended June 30, 1913.
(c) Statement setting forth in numerical order the advantages of double-entry over single-entry accounting systems.
(d) As a result of your convincing argument Mr. Howe has decided to change his system of accounting from single- to double-entry. Prepare the necessary entries to change the accounting system to double-entry, continuing the use of the old ledger and providing for controlling accounts for customers and creditors.
Instructions
See Volume I, Chapters LV and LVI.
II