| Real Estate and Building | $ 32,500.00 | |
| Plant and Machinery | 40,000.00 | |
| Patents and Good-Will | 80,000.00 | |
| Inventory, July 1 | 29,000.00 | |
| Purchases | 82,500.00 | |
| Labor | 88,000.00 | |
| Coal | 6,000.00 | |
| Salaries, General | 11,000.00 | |
| Salaries, Management | 5,000.00 | |
| Insurance | 875.00 | |
| Allowances | 6,250.00 | |
| Freight | 1,500.00 | |
| Discount and Interest | 750.00 | |
| Cash in Bank | 8,000.00 | |
| Investments | 15,500.00 | |
| Miscellaneous Expense | 4,300.00 | |
| Book Debts | 42,000.00 | |
| Preferred Stock in Treasury | 5,000.00 | |
| Repairs | 1,000.00 | |
| Preferred Stock | 100,000.00 | |
| Common Stock | 100,000.00 | |
| Sales | 219,175.00 | |
| Notes Payable | 26,000.00 | |
| Accounts Payable | 14,000.00 | |
| $459,175.00 | $459,175.00 |
Stock on hand $26,500.
From the above prepare profit and loss and income statement and balance sheet, giving effect in accounts to depreciation at the rate of 7½% a year, on plant and machinery, and making an allowance of 5% on the book debts to provide for bad debts; also create a liability in the balance sheet for dividend as stated.
40. Wm. Bates commenced business June 1, 1917, with a capital consisting of cash $60,000, and a building and lot worth $85,000, subject to a mortgage of $25,000, dated June 1, 1917, bearing interest at 6%.
One year later, June 1, 1918, an abstract of his books disclosed the following accounts: purchases $78,000; sales $85,000; sinking fund $8,000; cash drawings $6,000; goods returned to creditors $5,000; expenses paid in cash $9,000; profit and loss, debit $3,500; contingent fund $3,000; due to creditors $49,000; reserve for bad debts $4,250; due from customers $32,620; discounts allowed customers on accounts paid $755; returned sales $4,520; discounts on accounts paid to creditors $650. No goods were sold to creditors or purchased from customers. Unsold goods June 1, 1918, $9,500.
From the above data, prepare a trial balance, income statement, and balance sheet.
Note: Two items affecting accounts in the trial balance are missing and must be supplied.
41. In taking off a trial balance a bookkeeper finds that his debit footings exceed the credit by $131.56, which he carried to a suspense account. Later, he discovers that a purchase amounting to $417.50 has been debited to a creditor as $192.94; that $312.50 for depreciation of furniture has not been posted to depreciation account; that $500 withdrawn by the proprietor has been charged against wages account; that a discount of $76.13 allowed to a customer has been credited to him as $71.13, and that the total of sales returned was footed $5 short. Give detailed entries showing how you would remedy these errors, and starting with the original difference prepare a supplemental trial balance showing whether the books balance or not.
42. A and B are partners owning two retail stores, one in Paterson and the other in Newark. They agree to dissolve partnership as of July 1, 1918. The two stores are valued July 1, 1918, as follows: Paterson $4,573.50; Newark $3,600. On this basis B contemplates purchasing A’s interest. On being furnished with the following data, B requests you to inform him if the inventory of the Paterson store, January 1, 1918, was correct as A claims:
| Value of alleged Inventory, January 1, 1918, | |
| in the Paterson store | $3,800.00 |
| Purchases for both stores, January to July, paid for | 5,128.80 |
| Due to Creditors on account of both stores, July 1 | 1,500.00 |
| Cash Sales, Newark store | 1,875.00 |
| Cash Sales, Paterson store | 3,105.00 |
| Purchases, Paterson store, January to July | 3,326.00 |
| Profits 50% of Sales |