IV
The business has been in operation as a partnership one year. At the conclusion of this period the trial balance given below shows the condition of the accounts on the books of the firm.
Howe & Mason
Trial Balance, June 30, 1915
| Cash | $ 1,872.00 | |
| Accounts Receivable | 22,945.00 | |
| Reserve for Bad Debts | $ 384.00 | |
| Horses, Wagons, and Harness | 3,100.00 | |
| Reserve for Depreciation, | ||
| Horses, Wagons, and Harness | 120.00 | |
| Furniture and Fixtures | 5,390.00 | |
| Merchandise Inventory June 30, 1914 | 7,060.00 | |
| Notes Receivable | 12,456.00 | |
| Notes Receivable Discounted | 4,780.00 | |
| Accounts Payable | 24,220.00 | |
| Notes Payable | 8,500.00 | |
| Thomas J. Howe, Loan | 1,540.10 | |
| Thomas J. Howe, Capital | 8,000.00 | |
| Thomas J. Howe, Drawing | 2,440.00 | |
| Joseph Mason, Capital | 4,000.00 | |
| Joseph Mason, Drawing | 1,710.00 | |
| John H. Bartlett, Capital | 6,000.00 | |
| Sales | 158,335.00 | |
| Returned Sales and Allowances | 3,890.00 | |
| Purchases | 144,244.60 | |
| Freight Inward | 3,518.50 | |
| Warehouse Labor and Supplies | 1,002.00 | |
| Returned Purchases and Allowances | 2,714.00 | |
| Salesmen’s Salaries | 2,215.00 | |
| Advertising | 872.00 | |
| Freight and Cartage Outward | 316.00 | |
| Office Salaries | 2,619.00 | |
| Postage | 82.00 | |
| Stationery and Printing | 116.00 | |
| Legal Expenses | 85.00 | |
| Office Heat and Light | 212.00 | |
| Interest Earned | 117.00 | |
| Interest on Bank Balances | 14.00 | |
| Cash Discount on Sales | 2,306.00 | |
| Cash Discount on Purchases | 3,041.00 | |
| Interest Paid | 143.00 | |
| Telephone and Telegrams | 17.00 | |
| Insurance | 500.00 | |
| Rent | 2,200.00 | |
| Miscellaneous Expense | 74.00 | |
| Commissions on Sales | 380.00 | |
| $221,765.10 | $221,765.10 |
Additional information is as follows:
Merchandise inventory, June 30, 1915, $13,260; stationery and printed matter on hand $35; unused postage stamps $17.00. One-fourth of advertising is to be applied to the next year. Warehouse labor of $130, due but unpaid, has not been recorded on the books. Interest accrued but not recorded: on notes receivable $71, on notes payable $47, on bank balances $8. Rent prepaid $200.
You find that no record has been made on the books for $750 worth of merchandise received from Marsh & Co., but that these goods have been included in the current inventory. Four-fifths of the insurance has expired. Interest is to be accrued on Howe’s Loan account at 6%. Through error $100 of commissions on sales has been charged to Salesmen’s Salaries account.
It has been decided to provide for depreciation and reserves as follows: 10% reserve on reducing balances for horses, wagons, and harness; a reserve of ½% on sales for uncollectible accounts; by writing off 10% of the book value of furniture and fixtures.
Profits and losses are to be shared according to the original investments of the partners.
Give due consideration to the foregoing and construct: