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—:

Instructions

Problem 3. The net worth section of the balance sheet should be set up as follows:

Capital Stock $     
Surplus:
At beginning of period $       
Net profit for period          
At end of period         $     
 

XXII

1. Albert Johnson and Harold Taylor enter into a copartnership agreement for the purpose of buying and selling Christmas novelties. Each contributes cash, no other resources of use to this undertaking being available. Taylor, because of wide acquaintance among manufacturers, is to handle the buying end, and Johnson is to have charge of the details of store management and selling. They are to share profits and losses equally.

On November 15, 19—, operations begin. They keep a full record of all transactions, using a cash book, purchase journal, sales journal, general journal, and ledger. The following accounts are kept:

Enter the following transactions in their respective journals:

Nov.   
15. Each partner deposits $7,500 in the firm name of
  Johnson & Taylor at the Park National Bank.
  Paid $1,000 for furniture and fixtures.
  Paid rent $250 and advertising $100.
  Bought merchandise from Imbrie & Co. $2,000, paying $500
  cash, giving a note for $1,000, due in 30 days at 6%,
  and the balance remaining on account.
  Johnson withdrew $200 in funds for personal use.
16. Cash sales $430.80: on account to F. M. Wood $569.20;
  K. P. Temple $500.
17. Bought for cash, paper and twine $29.50;
  miscellaneous supplies $10.
18. Sold merchandise to M. K. Lord for $1,000, accepting his
  10-day 6% note for $500 and $300 in cash.
  Cash sales amounted to $450.
19. Bought a cash register for $150.
  Cash sales $400.
20. Bought merchandise from Bonbright & Co. for $500, 2/10, n/30.
  Paid Imbrie & Co. on account $450.
  Taylor took merchandise $25, for his own use.
  Cash sales were $800.
22. Cash sales were $300.
  Sold on account to Lewis $950; and to Marks $350.
23. Paid Bonbright & Co. the bill of the 20th.
  Paid salaries $40.
24. Sold T. C. Bailey, on account, $450 of merchandise.
  Johnson took $100 cash for current needs.
  The firm bought $1,400 merchandise from Halsey, Stewart & Co.
26. Bought of B. W. Chapman & Co., merchandise $250.
  Cash sales were $450.
27. The firm is notified that C. H. Marks has failed.
29. Sold bill of merchandise of $200 to T. C. Bailey, receiving $100
  in cash, and a 6% note for the balance, due in 10 days.
  Cash sales were $300.
30. Returned $50 merchandise to B. W. Chapman & Co.
  Paid freight $35; insurance $15.
  Lord paid note of $500 and interest.
  Paid $40 in wages and gave Halsey, Stewart & Co.
  a 10-day 6% note for amount due.

2. Using the adjustment data of Assignment XXI, Problem 3, close the ledger of the Port Bedford Terminal Co. and take a trial balance after closing.

Instructions

Problem 1. The purpose of this assignment is to give practice in the operation of the five journals in a going concern. The ledger will not be used.

Use a double sheet of two-column journal paper for the cash book. A single sheet of two-column paper will be sufficient for each journal.

Make full opening entry on November 15.

Do not summarize the journals until directions are given.

Note that the firm takes advantage of the Bonbright discount offer.

Make no entry as to the Marks’ failure until further instructions.

Problem 2. Transfer the balance of the ledger Profit and Loss account to the Surplus account.

XXIII

1. Continue the following as in Problem 1, Assignment XXII.

Dec.   
 1. Johnson took $100 for personal use.
  The firm paid $50 for freight bills.
  T. C. Bailey returned merchandise $50.
 2. Bought supplies for $18.50 cash.
  Electric light bill $18, and telephone bill $12, were paid.
 3. Cash sales were $240.
  They received $400 on account from Bailey.
 4. Lewis paid $850 on account.
  Bought from Imbrie & Co. $200 of merchandise.
 6. Taylor sold for $650 cash merchandise, for which the firm
  had paid $1,000.
  Sold on account to K. P. Temple $450; and to F. M. Wood $235.
 7. Paid $40 for salaries; and $15 for supplies.
 8. Paid $72 on insurance.
  Bailey paid his note of $100 and interest.
 9. Cash sales were $275.
  The firm bought from Imbrie & Co. $675; Bonbright & Co. $800.
10. Paid Halsey note with $2.33 interest.
11. Received on account from Lord $100; and from cash sales $150.
13. Temple gave a non-interest-bearing note due in 30 days for $500.
14. Paid freight-in bill $32; and coal bill $17.
  Salaries of $40 were paid.
15. Paid note to Imbrie & Co. with interest.
  The receivers of C. H. Marks paid $164, the balance of
  the claim being valueless.

Summarize all journals (referring to Problem 1, Assignment XXII, and the above) and balance the cash book.

2. The following information has been taken from the books of the Valhalla Company after the ledger was adjusted:

Draw up the statement of profit and loss.

3. Draft the journal entries necessary to close the ledger of the Valhalla Company.

4. Draw up the Profit and Loss account as it would appear in the ledger of the Valhalla Company.

5. Anthony B. Mans is the proprietor of a drug business owning assets and subject to liabilities as follows:

He sells the business as above, excepting the cash which he retains, to James R. Hart for $20,000 cash, which includes a bonus of $3,000 for his good-will. Mans withdraws all cash and deposits it in his personal bank account.

Make the necessary entries in Mans’ journal and cash book to record the sale transaction and the withdrawal of cash.

XXIV

As bookkeeper for Wm. C. Baldwin, dealer in coal and coke, you will use a general journal, a sales journal, a purchase journal, a cash book, and a ledger. Four double pages of journal paper and three double pages of ledger paper will suffice. At the top of the first page write “Journal of Wm. C. Baldwin.” Allow 130-150 lines for your Journal. The next blank double page will be used for a cash book, marked on the left at the top, “Dr.” and near the middle, “Cash.” Similarly the right page, “Cash”; and at the top, right-hand margin, “Cr.” Allow 80-100 lines for each side of the cash book. The next blank page mark “Sales Journal,” allowing 70-90 lines. The next blank page mark “Purchase Journal,” allowing 1 page. The last 3 pages, reserve for trial balances and statements. Number consecutively all pages in journal and ledger.

In the cash book use the first column on either side for items and the second column for totals and balances. Balance and rule the cash book at the end of each week, extending the “items” total before balancing and marking it for posting purposes “Cash, Dr.” or “Cash, Cr.” as the case may be. Enter the balance on the “Dr.” side in the “Total” column, and so keep each week’s receipts segregated. At the bottom of the page, unless it happens to coincide with the end of the week, carry “totals” of each side forward, not the balance.

In the sales and purchase journals mark the first column “On Account” and the second “Cash,” and make entries in them according as sale or purchase is “on account” or “cash.” If “cash,” entry must be made in the cash book also, in which case check the item in the ledger folio column in both journals, as total cash, sales, and purchases are to be posted from their respective journals. In making summary entries for the sales journal at the end of the month, rule and total each column, and bring the cash column total over on the next line into the “On Account” column, marking it “Cash Sales, Total.” Add these two and rule off, marking them “Sales, Cr.” The purchase journal will be handled similarly.

Open the following accounts in your ledger, beginning on the first page in the order given and allowing the number of lines to each account indicated by the numeral following each:

Cash 10
Notes Receivable 5
M. R. Hamilton 10
F. S. Kent 10
H. T. Avery 10
G. C. Furnald 10
C. P. Pell 10
S. T. Hartley 10
A. D. Livingston 10
Reserve for Doubtful Accounts 5
Coal Inventory 5
Furniture and Fixtures 10
Depreciation Reserve Furniture and Fixtures   5
Building 5
Depreciation Reserve Building 5
Land 5
Notes Payable 10
M. H. Hanna & Co. 10
American Coke & Chemical Co. 10
Peabody & Co. 10
Seabord By-Product Coke Co. 10
Midtown Realty Co. 8
Wm. C. Baldwin, Capital 10
Wm. C. Baldwin, Personal 10
Profit and Loss 20
Sales 15
Purchases  10
Purchases Returns and Allowances 8
Freight & Delivery Inward 10
Salesmen’s Salaries 10
Advertising 10
Delivery Expense 10
Expense Supplies 15
Rent 5
Insurance 8
Office Salaries 10
Sundry Expense 8
Cash Short and Over 7
Interest Expense 8
Depreciation 5
Bad Debts 5
Interest Income 8

Before recording any transactions, study carefully the accounts, particularly the expense accounts, which you will keep. Make your classification strictly according to them. Keep no additional accounts.

May 2, 19—, Wm. C. Baldwin, long interested in the coke business, bought out the Newark Coke Company on the basis of the values shown below.

The assets taken over were:

The liabilities assumed were:

 May   
 3. Bought for cash, account books $10; stationery $18;
  stamps $25; paid rent to June 2, $500.
  Sales were: on account, M. R. Hamilton $1,293.75;
  for cash $890.40.
 4. Bought coal and coke from M. H. Hanna & Co.
  on account $6,497.95.
  Paid freight-in $169.72.
  Bought insurance policy for one year $360.
  Sales were: on account, F. S. Kent $3,497.82; cash $614.80.
 5. Paid Peabody & Co. balance due.
  Sales on account: H. T. Avery $1,876.49;
  G. C. Furnald $5,973.80; cash $617.90.
 6. Bought from Seabord By-Product Co. on account $5,890.40.
  Allowed by M. H. Hanna & Co. $400 on account of impurities in coke.
  Paid freight-in $126.72.
  Sales were: on account, S. T. Hartley $3,487.60;
  M. R. Hamilton $2,947.30; F. S. Kent $2,476.30; cash $457.80.
 7. Received cash on account from M. R. Hamilton $1,000;
  F. S. Kent $2,750; H. T. Avery $975; G. C. Furnald $5,250.
  Paid bookkeeper $30; stenographer $25; clerks $40.
  Sales for cash were $1,075.
  Baldwin drew $100 in cash and $80 in coal for his home.
  Paid delivery expenses $200; and sales salaries $300.
 
  Balance, summarize, and post the cash book. The
  summary entry, “Cash, Dr.,” must, for this first
  week only, be set up opposite the total of the cash
  receipts journal, so as to include the cash capital
  invested. In all subsequent summary entries, the
  “Cash, Dr.” must include only the current week’s
  receipts—not the “Balance.”
 
 9. Paid the American Coke & Chemical Co. on account $7,500;
  cash for supplies $62.50; and advertising $1,000.
  Sales on account: H. T. Avery $2,146.70;
  G. C. Furnald $1,786.42; C. P. Pell $792.50;
  A. D. Livingston $863.47.
10. Bought from the American Coke & Chemical Co. $5,746.80 on account.
  Paid by check $350 for safe; and $125 for typewriter.
  Received payments from C. P. Pell $2,500;
  and S. T. Hartley $2,150.
11. Paid M. H. Hanna & Co. $8,942.50; paid freight-in $248.50.
  Canceled $250 of order of the 10th from
  American Coke & Chemical Co.
12. Sales on account: A. D. Livingston $2,387.50; H. T. Avery $1,820.
  Paid demurrage charges $290.75 by check.

Instructions

May 2. To determine Baldwin’s net investment and to serve as a guide for the order of entry of the various items in the journal, make a rough draft of balance sheet. Enter the “cash” investment in the Journal as a part of the compound opening entry, and also in the “Total” column of the cash receipts journal. Check (✔) the “cash” item in the general journal and also check the capital investment entry in the cash receipts journal.

May 12. Charge demurrage costs to the Freight and Delivery Inward account.

XXV

 May   
13. Bought from Peabody & Co. on account $4,910.
  Paid freight-in $144.70; paid to M. H. Hanna & Co.,
  the balance due.
  Sales on account were: S. T. Hartley $1,875.20.
14. Paid bookkeeper $30; stenographer $25; clerks $40.
  Cash sales for the week were $3,679.80.
  Baldwin drew $200 in cash, and gave on his personal account
  5 tons of coal worth $60 to the Community Association.
  Delivery expense was $220; and sales salaries were $300.
 
  Balance, summarize, and post the cash book.
 
16. Bought from M. H. Hanna & Co. on account $4,895.70.
  Paid freight-in $82.93; Merchants’ Association dues $50;
  stationery $55.25.
  Received cash on account: G. C. Furnald $1,275;
  C. P. Pell $1,350.
17. Bought a multigraph for cash $75, and paid freight on it
  of $10.22.
  Paid $96.17 for supplies.
  Returned $800 worth of coke to M. H. Hanna & Co.
  Cash was short $5.48.
  Paid on account: A. D. Livingston $1,375;
  M. R. Hamilton $3,500; F. S. Kent $4,035.
  Sold on account: H. T. Avery $1,275; G. C. Furnald $862.70;
  and C. P. Pell $1,872.60.
18. Received a 30-day 6% note from S. T. Hartley for $5,000,
  to apply on account; and a note dated May 16 at 6%,
  due July 16, for $3,000, from A. D. Livingston.
19. Paid $38.90 for repairs to office steps, which were
  broken by accident, not chargeable to the landlord.
  Canceled a $100 lot from Peabody & Co. on the last order.
  Bought from the American Coke & Chemical Co.
  on account $7,580.
  Paid $103.72 in-freight.
20. Paid Seaboard By-Product Coke Co. note $5,485.50,
  and interest.
  Purchases for cash were $1,270.
21. Baldwin discounted his own note at the bank for $1,000,
  for 30 days at 6%.
  Paid bookkeeper $30; stenographer $25; clerks $40.
Cash sales for the week were $3,195.60.
  Baldwin withdrew $400 in cash.
  Paid sales salaries $300; delivery expense $235;
  and American Coke & Chemical Co. $5,000 on account.
 
  Balance, summarize, and post the cash book.
 
23. Sold on account: A. D. Livingston $975.70;
  and M. R. Hamilton $1,392.65.
  Paid Patrol Protection Service $50; and $175 to repair
  heater and boiler, the latter item being allowed as
  applicable to future rent.
24. Sold refuse for cash $15.80.
  Bought from Peabody & Co. $2,120 on account,
  and paid freight $174.37.
25. Cash was short $1.04.
  Paid lighting bill of $31.75.
26. Received cash on account: F. S. Kent $1,500;
  H. T. Avery $1,875; G. C. Furnald $1,000.
  Sold on account: C. P. Pell $1,587; F. S. Kent $1,623.80;
  A. D. Livingston $1,217.80.
27. Purchased from Peabody & Co. on account, shipment of
  Pocahontas coal $900.
  Bought $50 worth of stamps.
  Cash was over $1.37.
28. Paid bookkeeper $30; stenographer $25; and clerks $40.
  Cash sales for the week were $2,175.80.
  Baldwin withdrew $250 for personal expenses.
  Delivery expenses were $245; and sales salaries $300.
  Paid the Seaboard By-Product Coke Co. bill of May 6.
  Balance, summarize, and post the cash book.
31. Paid Peabody & Co. $1,000 on account.
  Bought of M. H. Hanna & Co. on account $6,250.
  Telephone bill was $52.45; and cash was over $.51 (51 cents).
  Bought of Seaboard By-Product Coke Co. on account $2,890.70,
  paying $52.18 in-freight.
  Gave the American Coke & Chemical Co. a 90-day note
  at 6% for $1,250.
  A. D. Livingston paid $500 on account.
  Cash sales were $480.90.
  Received on account: M. R. Hamilton $3,000;
  F. S. Kent $2,000; C. P. Pell $2,500.
  Bought from Midtown Realty Co. the lot in which the yards
  were located for $2,000, and the buildings with equipment
  for $8,575, giving $5,575 in cash and executing a 6%
  mortgage on private properties not carried on the books
  of the business for the balance.

Instructions

May 14. The coal given to charity is a personal expense of Baldwin’s.

May 31. Record the purchase of lot and building as a credit for the entire amount to the vendor. Cancel the liability to the vendor by entry in the cash book for the cash portion, and in the general journal for the mortgage.

XXVI

Balance the cash book, total, and make summary entries for the sales and purchase journals.

Post completely the sales and purchase journals, then the general journal and cash book. Be sure to post the weekly totals of cash receipts and cash disbursements as well as the totals for the end of the month.

Take a trial balance of account balances and record it on page 13 of your journals, labeling it

“Trial Balance, May 31, 19—, Wm. C. Baldwin.”

Instructions

Refer to pages 142, 148, 149, for the form of the various journal summaries and to 547-548, practice data, for the method of summarizing.

Be very careful always to cross-index every posted item in both ledger and journals just as soon as the posting of that item is completed. The ledger folio columns in the journals are thus an indication as to how far the work of posting has proceeded, in case the bookkeeper is interrupted before completing the postings.

XXVII

Draw up a balance sheet and statement of profit and loss for Wm. C. Baldwin, taking into account the following adjustments and inventories:

Instructions

Use the method of the work sheet in doing this assignment. Follow closely the illustration in the text. After the work sheet has proved the accuracy of the work, draw up the formal statements.

XXVIII

1. Adjust and close Wm. C. Baldwin’s ledger, taking account of the adjustment data given in Assignment XXVII.

2. Take a post-closing trial balance.