QUESTION 3.

A. is the owner of a business with property valued as follows:

Real estate and buildings

Machinery and tools

.....

Stock and trade

$100,000

79,000 93,500

A., B., C., D., and E. organize a corporation (F) with an authorized capital of $350,000, divided into 3,500 shares of $100 each, under the following conditions:

A. receives 2,725 fully paid shares for his property as above.

B. subscribes for 100 shares.

C. subscribes for 100 shares.
D. subscribes for 100 shares.

E. subscribes for 125 shares.

100 shares are placed in the treasury for future disposition, and 50 shares for fully paid stock are given to each incorporator for the cash payment of 10% of par value, in consideration of services in the organization of the company. Each incorporator then donates 30 shares to the company for sale to provide working capital.

Draft the necessary opening entries for Corporation F., giving effect to the above transactions, and prepare resulting trial balance.

QUESTION 8.

You are instructed to prepare the statement of affairs of John Smith as at August 31, 1907. Following are the particulars:

Accounts payable

Bills payable

...

Loan from Wm. Jones
Bank overdraft

Accounts receivable

Furniture and fixtures

Real estate and improvements

Merchandise

$4,000

3,500

15,000

1,000

2,800

500

5,000

7,000

Smith has other merchandise to the amount of $5,000, in addition to the $7,000 above stated, $1,200 of which is held by the bank as security for the overdraft, and $3,800 by Wm. Jones as security for his loan. Jones also holds a first mortgage on the real estate and improvements. Of the accounts receivable, $300 are considered bad, and $250 are expected to realize 50% of their face value. These items must be properly dealt with, and the deficiency shown.

JOURNAL OF THE MUKILTEO SHIPBUILDING COMPANY. ADJUSTMENT ENTRIES.

Equipment

$17,500.00

.....

$17,500.00

To Operating, Maintenance and General Expenses.
To transfer and adjust bona fide renewals
of equipment, having been charged to
operating expenses, to equipment account.

Operating, Maintenance and General Expenses.... $6,000.00

SOLUTION 3.

JOURNAL OF THE F. COMPANY.

The F. Company, a corporation duly organized under the laws of the State of Washington, with an AUTHORIZED CAPITAL of $350,000.00, divided into 3,500 shares of $100 each.

For 425 shares of capital stock issued to
subscribers in accordance with subscrip-
tion.

Real estate and buildings

$10,000.00

10,000.00

10,000.00

12,500.00

$42,500.00

$42,500.00

42,500.00

$100,000.00

For 2,725 shares of the capital stock,
issued to vendor in payment of the
assets transferred by him to this Co.

Organization expenses
Cash

To Capital Stock

250 shares of capital stock, fully paid
up, are given to the incorporators (50 to
each) for the cash payment of 10% of
par value, in consideration of services in
the organization of the company.

Treasury stock

To Working Capital

150 shares of capital stock donated by
the incorporators (each 30 shares) to the
Co., for sale to provide working capital.

Cash

$22,500.00
2,500.00

25,000.00

$15,000.00

15,000.00

TRIAL BALANCE OF THE F. COMPANY.

$2,500.00

93,500.00

79,000.00

100,000.00

15,000.00

22,500.00

42,500.00

SOLUTION 8.

STATEMENT OF AFFAIRS OF JOHN SMITH, AUGUST 31, 1907.

Bad.

Loan from Jones.