Part 2 — REVIEW QUESTIONS ON THE SUBJECT OF SINGLE PROPRIETORS' AND PARTNERS' ACCOUNTS

1. What books are generally used in a small retail business? What is a blotter, and how is it used?

2. What is the special feature of the journal ruled ledger, and of what advantage is such a ledger in a retail business?

3. In a single proprietorship, what does the proprietor's account represent?

4. Name one good reason why withdrawals of the proprietor should be charged to a personal account.

5. When the books are closed, what account absorbs the profit or loss?

6. What is meant by taking an inventory, and what processes are involved?

7. Should an inventory be based on cost or on selling prices? Why?

8. What is meant by closing the books?

9. In a retail business, such as is discussed in the text, what regular accounts are closed into trading account?

10. What does the balance of trading account represent? Into what account is this balance closed?

11. What does the difference between assets and liabilities, as shown by the balance sheet, represent? In a single proprietorship, with what ledger account does this balance agree?

12. George Thompson commences business to-day, with assets consisting of cash, $1,650.00; an account due from Henry Watson, $84.60. His transactions consist of purchases on account as follows:

From Henry Karl & Co. $460.00

" White & Black 320.50

Purchases for cash 129.00

Sales for cash 87.50

" on account 274.80

Paid on account to Karl & Co. 300.00

Collected on account 124.80

Paid for sundry expenses 63.70

Inventory at close of business 655.50

Open the books, enter the transactions in journal, cash book, and sales book, and make all postings to the ledger. Prepare a trial balance,

At the close of business, prepare a trading account, close into profit and loss, and close net profits into proprietor's account, Prepare a balance sheet,

13. What is a sales ticket, and for what purpose is it used?

14. What benefit is derived from keeping departmental purchase and sales records.

15. Prepare suitable forms for departmental purchase and sales records for a business divided into three departments.

16. What is a partnership?

17. What is the purpose of a partnership agreement?

18. By what names are the different classes of partners known?

19. On what basis are the profits of a partnership usually divided?

20. How are the personal and capital accounts of partners distinguished? What is the purpose of each of these accounts?

21. When the books of a partnership are closed, into what accounts are the revenue accounts closed? Into what accounts is the profit and loss account closed?

22. When the business of a partnership is sold, or liquidated, how are the net assets divided?

23. If any part of the assets, other than the goods in which the firm is trading, brings a price above cost, what journal entry is necessary? What entry if the price is below cost?

24. When partners invest unequal amounts in the business, what is the usual method of adjusting the inequality?

25. White, Black, and Brown who have been conducting business under a partnership agreement, decide to liquidate the business and dissolve the partnership. In the final settlement White agrees to accept the accounts receivable, which amount to $6,432.00, in part payment of the amount due him, provided 10% is first charged off to cover doubtful accounts. What journal entry is necessary?

26. H. W. Hackett has been conducting a grocery business. His books have been kept by double entry, and were last closed December 31st, 1908. At that time, his net worth was $2,698.50. April 30th, 1909, he sold to John Ransom a half interest in the business for $1,500.00. Ransom made a cash payment of $1,000.00, and gave his note for $500.00 payable on demand, with interest at 6%. The profits for the four months ending April 30th, 1909, (estimated from the books), were $325.00. This amount was to be allowed to Mr. Hackett and placed to his credit on the books. Make journal entries for the allowed profit and for the sale of the half interest. The books are not to be closed at the beginning of the new partnership.

27. Prepare in proper form a solution of the problem given in Art. 40, Page 72.

28. Prepare a complete solution of the problem given in Art. 42, Page 74.