Question 31:

a)
Date

Description

Jul. 1

Larry, capital

Debit

Credit

30000

Curly, capital

30000

To record buyout of Larry

b)
Total capital: 20,000 + 30000 + 40000
= 90000
Curlys capital: 90000 3 = 30000
Bonus: 40000 30000 = 10000
Each partner gets 5000
Date

Description

Jul. 1

Cash

Credit

40000

Curly, capital

30000

Moe, capital

5000

Larry, capital

5000

To record Curlys investment and bonus to

Moe and Larry

ii)

Debit

Moe, Larry and Curly

Balance Sheet
July 1, 2008
Assets

Liabilities and Equity

Cash

45000

Other assets

65000

Total liabilities

20000

Partnership Equity

Total Assets

110000

Moe, capital

25000

Larry, capital

35000

Curly, capital

30000

Total Equity

90000

Total Liabilities and Partnership

Equity

Question 32:
a)
Total net loss
Allocation to
partners

Hogan

Reichlin

Stanford

516003=
17200

516003=
17200

516003=
17200

Hogan

Reichlin

Stanford

7000040%=
28000

7000035%=
24500

7000025%=
17500

Total
51600

b)
Total net loss
Allocation to
partners
c)
Total capital: 6000+18000+36000
= 60000
Partners share percentage:
Hogan: (600060000) 100% = 10%
Stanford: (1800060000) 100% = 30%

Total
51600

110000

Reichlin: (3600060000) 100% = 60%

Total net profit
Allocation to
partners

Hogan

Reichlin

Stanford

Total
88000

8800010%=
8800

8800060%=
52800

8800030%=
26400

Hogan

Reichlin

Stanford

1320003=
44000

1320003=
44000

1320003=
44000

d)
Total net profit
Allocation to
partners

Total
132000

Question 33:
a)
Date
Dec. 31

Description
Cash

Debit

Credit

39000

Non-cash assets

39000

To liquidate non-cash assets

Liabilities

22000

Cash

22000

To settle liabilities with creditors

Murray, capital

7000

Lauren, capital

10000

Rui, capital
Cash
To dissolve the partnership

b)

8000
25000

Murray, Lauren and Rui

Statement of Partnership Equity
December 31, 2008
Murray

Lauren

Rui

7000

10000

8000

+ Net income share

20000

20000

20000

- Drawings

(2000)

(5000)

(3000)

Ending capital

25000

25000

25000

Beginning capital

Question 34:
a) The OLG is a Not for profit corporation
b) OLG obtains its money by the sale of lottery products. They spend this by
giving their revenue to non-profit organizations and the Government to
provide services to Ontarians.
c) Andre Marin alleged that OLG paid out tens of millions in winnings to
dishonest retailers.

Question 35:
a)
Date
Nov. 1

Description

Debit

Cash

4275000

Common Stock

Credit

4275000

To record the sale of 75000 shares @ $57

Organizational costs

5700

Common Stock

5700

To record the issuing of 100 shares @ $57 for

organizational costs

Building
Preferred Stock

500000
500000

To record the sale of 5000 shares @ $100 and

callable @ $110, dividend $4

10

Common Stock

57000

Cash

57000

To record the repurchase of 1000 shares @ $57

b) $5700
c) $5700 0.75= $4275 0.07 = $299.25
d) 75000+100-1000=74100
e)
Capital Stock
Shareholders Equity
$4 cumulative preferred issued 5000 shares

500000

Common stock issued 74100 shares

4223700

Total Capital Stock

4723700

Question 36:
a)
Date
Jan 21

Description
Dividends

Debit

Credit

50000

Dividends Payable

50000

To record the declaration of $0.20 dividends

for 250,000 shares

Feb 28

Dividends payable
Cash
To record the payments of $0.20 dividends
for 250,000

50000
50000

June 20

Stock dividend declared

2500000

Common Stock dividend distributable

2500000

To record stock dividend of 5% on 250000

shares at current market price of $200
250000 x 0.05 = 12500 x $200 = 2500000

Dec 31

Retained Earnings

50000

Dividends

50000

To close the dividends account for the end

of a fiscal period
Dec 31

Retained Earnings
Stock dividend declared

2500000
2500000

To close the dividends account for the end

of a fiscal period

b)
Cash dividends effects retained earnings by moving the cash from dividends to
owners equity section on balance sheet.
Stock dividends effects retained earnings by converting into common stock then
transferring into owners equity selection on balance sheet.
Stock splits have no effect on retained earnings.
c)
250000 x 2 = 500000

d)

Latent Enterprises
Statement of Retained Earnings
Year Ended Dec 31, 2008

Retained Earnings Jan 1

148000

Minus: Dividends

50000

Retained Earnings Dec. 31

$98000

Latent Enterprises
Balance Sheet
As at Dec 31, 008
Shareholders Equity
Common shares, 250000 outstanding

50000000

Stock Dividend Declared

2500000

52500000

Retained Earnings Dec 31

98000

Total Shareholders Equity

52598000

Question 37:
a) & b)
Superclue Enterprises Inc.
Income Statement
For the year ended Dec 31, 2008
Component
Analysis

Net Sales

$530456

100%

COGS

$234562

44.2%

Gross Margin

$295894

55.8%

Expenses

$198456

37.4%

Income from continuing operations

$97438

18.4%

Discontinued Operations

($19008)

Gain on disposal of discontinued operations $24555

Loss from discontinued operations $43563
Income before extraordinary items

$75430

14.2%

Extraordinary Items
Gain on expropriation of land

$54878

Net Income

$130308

Weighted average earnings per share on income from

continuing operations
$0.71

(125000-Jan to June 30)

(150000-July 1 to Dec.)
Income before extraordinary items

$0.55

Earnings per Share Net Income

$0.71

Question 38:
a)

Tandy Green Inc.

Balance Sheet
As at Dec 31, 2008
Assets
Current Assets
Cash/Bank

$45000

Accounts receivable

30500

Supplies

34560

Inventory

145090

Total current Assets

$255150

Fixed Assets
Land

156890

Building

$100450

Less Accumulated Depreciation: Building

10045

Vehicle

25423

Less accumulated depreciation: Vehicle

5085

90405

20338

Total Fixed Assets

267633

Total Assets

$522783

Liabilities
Current Liabilities
Accounts payable

54356

Long Term Liabilities

Bank Loan

45670

Mortgage Payable

105765

Total Long term liabilities

151435

Total Liabilities

205791

Shareholders Equity
Capital Stock

175360

Retained Earnings

141632

316992

Total Shareholders Equity

Total Liabilities and Shareholders Equity

$522783

b)
Tandy Greens Inc.
Statement of Shareholders Equity
December 31, 2008

Capital stock

$2 Preferred stock, 10000 outstanding

Common stock 10000 outstanding

$75360

$100000

$175360

Retained Earnings

$141632

Total Shareholders Equity

$316992

c)

Tandy Greens Inc.

Statement of Retained Earnings
December 31, 2008
Retained Earnings, January 1,
2008

$127772

Add: Net Income

26340

Less: Dividend Declared

(2000)

Less: Error in inventory the

previous year
Retained Earnings, December 31,
2008

(10480)
$141632