PRINCIPLES OF ACCOUNTING

PRINCIPLES OF ACCOUNTING

Part A

 1.  After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances.

  Cash      18,000

  Inventory     73,000

  Other assets   157,000

  Accounts Payable    61,000 

  Abel, Capital    50,000

  Barney, Capital   50,000 

Cole, Capital   87,000  

  Noncash assets are sold for $275,000. Profits and losses are shared equally.

  After all liabilities are paid, divide the remaining cash amongst the partners.

 2.  The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:

  Cash $10,000 

Other Assets 8,000 

Liabilities 4,000 

Brandon, Capital  7,000 

Ryan, Capital 7,000  

a. I f the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?

b. I f the Other Assets are sold for $8,000, how much will each  PARTNER  receive before paying liabilities and distributing remaining assets?

Part B

1. Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries.

a. Initial deposit

b. The first year’s interest

  c. The redemption of the bonds  

2.  On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries.  

a. Issued the bonds

b. Paid first semiannual interest payment

c. Retired the bonds at maturity

Part C

1. Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 2012, from the following:  

Retained Earnings, January 1, 2012 $2,000  

Dividends paid during the year 800

Net income for the year 3,000  

Correction of prior year error.

Purchase   of land recorded as rent expense 1,000  

2. Curtis Corporation’s balance sheet included the following:  

Common Stock, $5

par value, 5,000

shares issued   and outstanding $25,000

Retained Earnings 20,000

Total Stockholders’ Equity $45,000

Prepare journal entries for the following transactions.   May    3 Issued 500 shares at $6 per share       9 Reacquired 100 shares at $4 per share     15 Reissued 50 of the Treasury shares at $7 per share     17 Reissued 10 of the Treasury shares at $3 per share