They hold notes against the following: Murray & Co., $450; interest accrued for 3 mo. James E. Marston, $320; discount allowed for 2 mo. They have the following notes outstanding: Thomas D. Fales, $350; interest accrued for 2 mo. Office fixtures valued at $325 Horses and wagons valued at $500 Accounts receivable, $2450; estimated discount, 1% 3. The formation of partnerships. The following illustrations apply to the formation of partnerships: First, the formation of a partnership on the basis of equal investment by each partner at the beginning of the business. The necessary entry is of the simplest character, as follows: When posted, each partner's account will appear as follows: Second, the formation of a partnership by the individual proprietor when he sells a half interest in an established business. Illustration: A has an established business worth $15,000; he sells B a half interest for $7500; thus B becomes an equal partner. The money received by A is not a part of the capital of the new firm; it is his individual possession, and the capital of the firm is $15,000. On A's books, as proprietor, the capital account appeared as follows: Under the partnership agreement one half of this sum must be credited to each partner, and this is accomplished by the following journal entry : When this entry is posted, the accounts of the proprietors, on the books formerly used by A, will appear as follows: Third, the formation of a partnership when the incoming partner makes an investment equal to the value of the established business. Illustration: A has a business worth $18,000; B invests a like sum and becomes an equal partner. The money invested by B is a part of the capital of the firm, which is now $36,000. On A's books, as proprietor, the capital account appeared as follows: The following entry should be made when B makes his investment: After posting this entry in the books formerly used by A, B's account will appear as follows: A's account will remain unchanged, and each partner is now credited for one half of the capital of the firm. NOTE. The cash items in the illustrations may be entered in the cashbook; the journal entry has been used simply to set forth the debit and the credit items more clearly. Only two partners have been considered, but the principles are the same whether there are two partners or more than two, and whether the investments are equal or unequal. Make entries for the following partnership arrangements: a. Henry T. Jackson and James Young form a partnership, as follows: Henry T. Jackson invests cash, $1500, and a stock of merchandise valued at $2750. James Young invests cash, $1250, and a store and lot worth $3000. b. Student and Fred S. Carmen form a partnership, as follows: Student invests cash, $2000, and R. S. Good's note which he holds ; face Fred S. Carmen invests cash equal to the total investment of Student. NOTE. How much of the Mason investment and loan should be entered on the books of the business? SET VI. WHOLESALE GROCERY BUSINESS The Object of this set is to illustrate in a brief way a system of bookkeeping adapted to a general wholesale business. Special Features. Among the special features of the set are: 1. Introduction and use of: a. Auxiliary ledgers. b. Special-column cashbook. c. Special-column journal. d. Proprietors' private accounts. 2. Adjustment of interest in the Proprietors' accounts. 3. Suggestions bearing upon business correspondence. The Books used are the cashbook, the sales book, the invoice book, the journal, the general ledger, the purchase ledger, the sales ledger, the bill book, and the check book. The bill book and the check book are the same as in the preceding sets. Sales Book. This book is treated in the same way as the one illustrated on page 64, except the posting. The amounts of the various sales are posted separately to the debit of the personal accounts in the sales ledger. |