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Part A (15 points each for a possible total of 30 points)

After several years of business, Abel, Barney, and Cole are liquidating. The following are post-closing account balances.

Cash                                       18,000
Inventory                               73,000
Other assets                          157,000
            Accounts Payable                            61,000
            Abel, Capital                                     50,000
            Barney, Capital                                 50,000
            Cole, Capital                                     87,000

Non-cash assets are sold for $275,000. Profits and losses are shared equally.

After all liabilities are paid, divide the remaining cash amongst the partners.

The partnership of Brandon and Ryan is being liquidated. All gains and losses are shared in a 3:1 ratio, respectively. Before liquidation, their balance sheet balances are as follows:

Cash                           $10,000
Other Assets             8,000
Liabilities                  4,000
Brandon, Capital      7,000
Ryan, Capital                                    7,000

If the Other Assets are sold for $10,000, how much will each partner receive before paying liabilities and distributing the remaining assets?
If the Other Assets are sold for $8,000, how much will each partner receive before paying liabilities and distributing remaining assets?

Part B (20 points each for a possible total of 40 points)

Simon Brothers pays $47,000 into a bond sinking fund each year to redeem the future maturity of its bonds. During the first year, the fund earned $3,825. At the time of bond redemption, the fund has a balance of $417,000. Of this, $400,000 was used to redeem the bonds. Journalize the following entries.

Initial deposit
The first year’s interest
The redemption of the bonds

On January 1, Auctions Online issued $300,000, 9%, 10-year bonds to lenders at the contract rate. Interest is to be paid semiannually on July 1 and January 1. Journalize the following entries.

Issued the bonds
Paid first semiannual interest payment
Retired the bonds at maturity

Part C (15 points each for a possible total of 30 points)

1.         Prepare a statement of retained earnings in proper form for White Corporation for the year ended December 31, 2012, from the following:

Retained Earnings, January 1, 2012                       $2,000
Dividends paid during the year                            800
Net income for the year                                          3,000
Correction of prior year error. Purchase
of land recorded as rent expense              1,000

2.         Curtis Corporation’s balance sheet included the following:

Common Stock, $5 par value, 5,000 shares issued
and outstanding                                                       $25,000
Retained Earnings                                                   20,000
20,000
Total Stockholders’ Equity                                     $45,000
$45,000

Prepare journal entries for the following transactions.

May    3          Issued 500 shares at $6 per share.
            9          Reacquired 100 shares at $4 per share.
            15        Reissued 50 of the Treasury shares at $7 per share.
            17        Reissued 10 of the Treasury shares at $3 per share.

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