PROBLEM C.6
FRONTIER WESTERN WEAR, INC. (concluded)
d. FRONTIER WESTERN WEAR, INC.
Partial Balance Sheet
December 31, 2015
Stockholders’ equity:
Capital stock 800,000$
Retained earnings (computation below) 34,000
Total stockholders’ equity 834,000
25 Minutes, Easy PROBLEM C.7
WESSON CORPORATION AND AMBER INDUSTRIES
a. WESSON CORPORATION
Partial Balance Sheet
December 31, 2015
Stockholders’ equit
y
:
Capital stock 250,000$
Retained earnin
g
s 21,000*
Total stockholders’ equit
y
271,000$
45 Minutes, Strong PROBLEM C.8
S & X CO.
a. General Journal
(
1
)
No
9 Cash 15,000
Saunder, Capital 15,000
To record additional investment b
y
owner.
To record withdrawal from business.
30 Saunder, Drawin
g
1,000
Cash 1,000
To record withdrawal from business.
(
2
)
30 Saunder, Capital 4,000
Owner’s Capital account.
b.
(
1
)
No
9 Cash 15,000
Capital Stock 15,000
To record additional investment b
y
owner.
15 Salaries Expense 1,500
g
PROBLEM C.8
S & X CO. (concluded)
General Journal
Nov 30 Salaries Expense 1,500
Cash 1,500
(2) 30 Income Tax Expense 600
Income Tax Payable 600
To accrue income taxes expense for November.
($2,000 × 30% = $600)
30 Income Summary 600
To close the Income Summary account.
30 Retained Earnings 1,000
Dividends 1,000
To close the Dividends account.
c.
The net income differs for two reasons. First, the corporation is subject to income taxes,
income of the sole proprietorship ($5,000) through his individual income tax return. (This
assumes that the net income of the sole proprietorship is equal to its taxable income.)
If the business is organized as a corporation, Saunder will pay taxes on his individual tax
PROBLEM C.9
AVERY AND KIRK
a. General Journal
July 1 Cash 30,000
Inventory 56,000
George Avery, Capital 86,000
To record Avery’s investment in the partnership.
b.
Assets
20 Minutes, Easy
AVERY AND KIRK
Balance Sheet
July 1, 20xx
PROBLEM C.9
AVERY AND KIRK (concluded)
c. General Journal
25 Minutes, Medium PROBLEM C.10
COMEDY TODAY
a.
Distribution of Net Income Abbott Martin Net Income
(1) Fixed ratio
Net income to be divided 110,000$
Interest allowances on beginning capital:
Abbott ($80,000 × 15%) 12,000$
Martin ($120,000 × 15%) 18,000$
Total allocated as interest allowances (30,000)
Remaining income after interest allowances 80,000$
Net income to be divided 110,000$
Salary allowances to partners 36,000$ 56,000$ (92,000)
Income after salary allowances 18,000$
Interest allowances on beginning capital:
Abbott ($80,000 × 15%) 12,000