Statement of Financial Position of Abel, Barney, and Cole

Debit Credit 

Liabilities	Amount in $	Assets	Amount in $
Abel’s Capital	50,000	Cash	18,000
Barney’s Capital	50,000	Stock	73,000
Cole’s Capital	87,000	Additional Assets	157,000
Accounts Payable	61,000
Net Amount	248,000	Net Amount	248,000

The assets of the partnership company are equal to the liabilities. However, the corporation is being liquidated, and they have to sell the assets to settle the debts. First, the company needs to compensate the creditors because it has arrears of $ 61,000. Subsequently, the partners must regain their initial capital contributed to the company. Abel and Barney offered a similar amount of money amounting to $ 50,000 each. Besides, Cole added a different amount of capital, which amounted to $ 87,000. Thirdly, the partners can share the profits or losses equally from the proceeds of selling the assets. 

Partnership Books 

Cash Account 

Debit Credit 

Particulars	Amount in $	Particulars	Amount in $
Balance b/d	18,000	Accounts payable	61,000
Proceeds on sale of assets	275,000
		Balance c/d	232,000
Total	293,000		293,000

The company sold non-cash assets amounting to $ 275,000. It must settle all the obligations before compensating the partners their share capital. After paying the debtors, the company will repay Abel, Barney, and Cole their contributions, which must be recorded in the partnership account. Then, the company will divide the profits among the shareholders equally. 

Partnership Capital Account 

Debit Credit 

Particulars	Barney	Abel	Cole	Particulars	Barney	Abel	Cole
Bank	77,333	77,333	77,333	Balance b/d	50,000	50,000	87,000
				Realization of profit	27,333	27,333	(9,667)
	77,333	77,333	77,333		77,333	77,333	77,333

The total profit realized after the company settled the obligations amounted to $ 77,333 each. Besides, the partners will receive the capital regarding the contribution amount. Therefore, Barney and Abel will receive $ 127,333 from the company. Cole will receive $ 164,333 since he had the highest contribution as compared to the other partners. 

Question Two 

Statement of Financial Position for the Corporation 

Debit Credit 

Particulars	Amount in $	Particulars	Amount in $
Liabilities	4,000	Cash	10,000
Brandon’s capital	7,000	Additional assets	8,000
Rayan’s capital	7,000
Total	18,000		18,000

Brandon and Rayan want to liquidate their partnership. The partners have agreed to sell other assets to compensate the debts. Besides, the partners will distribute the remaining assets equally. The other assets have been sold at $ 10,000, which must be recorded in cash account to track the transactions in the company. Thus, the cash account is presented as follows. 

Cash Account 

Debit Credit 

Particulars	Amount in $	Particulars	Amount in $
Balance	10,000	Balance c/d	20,000
Proceeds from assets	10,000
	20,000		20,000

The corporation sold assets amounting to $ 10,000 and has to compensate the debtors and partners. The amount is shared among the partners for ratio 3:1. The amount that the partners will receive before settling the obligation is presented below. 

Partnership Capital Account 

Debit Credit 

Particulars	Brandon	Rayan	Particulars	Brandon	Rayan
Bank	7,500	2,500	Balance b/d	7,000	7,000
			Realization of profits or losses	500	(4,500)
	7,500	2,500		7,500	2,500

Bradon will receive $ 14,500 while Rayan will get $ 9,500 before compensating the debtors and distributing the assets. 

Partnership Capital Account 

Debit Credit 

Particulars	Brandon	Rayan	Particulars	Brandon	Rayan
Bank	6,000	2,000	Balance b/d	7,000	7,000
			Realization of profit or losses	(1,000)	(2,000)
	6,000	2,000		6,000	2,000

Brandon received $ 13,000 while Rayan got $ 9,000 before the company redistributed the properties and met the obligations. 

Part B: Question One 

Initial deposit 

Particulars	Dr (Amount in dollars)	Cr (Amount in dollars)
Bond sinking fund  Cash	47,000	47,000

In every debit entry, there is a corresponding credit amount. The account of the sinking fund is debited $ 47,000 which has been paid by the Simon Brothers. Thus, it was recorded in the bond sinking fund account. Alternatively, the amount was credited in cash account of the Simon Brothers. 

The 1 st year interest 

Particulars	Dr (Amount in dollars)	Cr (Amount in dollars)
Bond sinking fund  1 st -year interest	3825	3825

The sinking fund corporation earned $ 3,835 from the bond. Therefore, the bond sinking fund account is debited with $ 3,825 because the company receives the earnings. The first year interest account is credited with $ 3,835. 

Redemption of bonds 

Particulars	Dr (Amount in dollars)	Cr (Amount in dollars)
Bond payable  Cash  Bond sinking Value	400,000  17,000	417,000

During the bond redemption period, the company had collected $ 417,000 from the bond. Therefore, the bonds payable account is debited with $ 400,000. The cash account is debited with $ 17,000 because the corporation receives the amount after trading with financial assets. Alternatively, the bond sinking value is credited with $ 417,000 after the stocks are redeemed upon maturity. 

Question Two 

Issuing the bonds 

Particulars	Dr (Amount in dollars)	Cr (Amount in dollars)
Bank  Bond payable	300,000	300,000

Auctions Online issues bonds at $ 300,000 where the bank amount is debited and the bonds payable account is credited with the similar sum. The bank account that is credited belongs to the issuer, Auctions Online. The bond payable that is credited is that of the receiver of the financial asset. 

Paid the 1 st semi-annual interest payment 

Date	Particulars	Dr (Amount in dollars)	Cr (Amount in dollars)
1/6	Interest Expense  Bank	13500	13500

The interest expense of the bonds amounted to $ 13,500. Thus, the interest expense account was debited with $ 13,500 and the bank was credited with a similar amount. The interest expense account that was debited was that of the receiver. 

Retired bonds on maturity 

Particulars	Dr (Amount in dollars)		Cr (Amount in dollars)
Bonds payable  Bank	300,000	300,000

Upon maturity, the bond was redeemed at $ 300,000. Thus, the bonds payable account is credited, and the bank is debited using a similar amount. 

Part C 

Question One 

SRE (Statement of Retained Earnings) for White Company 

Date	Particulars	Amount in Dollars ($)
31/December/2012	Retained Earnings balance  Dividends  Total Income  Errors in Income Statement on Rent costs	2,000  (800)  3,000  1000
	Retained Earnings as at 1 st January 2012	5,200

Journal Entries 

On 3 rd May, Curtis Company issued 500 shares at $ 6 each, which can be calculated as 

500*6 = $ 3,000 

Date	Particulars	Dr (Amount in $)	Cr (Amount in $)
3 rd May	Bank  Common stock  Share premium	3,000	2,500  500

The bank account was debited with $ 3,000. However, the common stock and share premium accounts were credited with 2,500 and 500. 

On 9 th May, the company re-acquired 100 shares at $ 4 each, which can be computed as 

4*100 = $400 

Date	Particulars	Dr (Amount in $)	Cr (Amount in $)
9 th May	Treasury Stock  Bank	400	400

The treasury stock account was debited with $ 400 while the bank was debited with a similar amount. 

On 15 th May the corporation re-issued 50 shares worth $ 7 which can be computed as follows. 

50*7 = $350 

Date	Particulars	Dr (Amount in $)	Cr (Amount in $)
15 th May	Bank  Treasury stock  Share premium	350	200  150

On 17 th May, the company re-issued ten shares valued at $ 3 each. 

10*3= $ 30 

Date	Particulars	Dr (Amount in $)	Cr (Amount in $)
17 th May	Cash  Share premium  Treasury Stock	30  10	40