6. Submit trial balance of ledger of Benton & Douglas as the accounts

appear after the purchase of Kemp's interest. Remember that no additional capital is invested. =39. Sale of Partnership.= When the business of a partnership is sold, the net assets must be divided among the partners according to agreement, unless the partnership is to continue for the transaction of the same or some other class of business. As a rule, the liabilities are paid (if possible), from the cash funds on hand, leaving the net assets for division. In the division of assets, one partner will frequently agree to accept a certain class of assets in lieu of cash, but at a discount. To illustrate, one partner might accept fixtures, which cost $1,000.00, at 10% discount. Deducting 10% from the cost price of the fixtures reduces the assets just that amount, and it is necessary to debit profit and loss and to credit fixture account, with the loss. If any class of assets, other than the goods in which the firm is trading, bring a price above cost, it is necessary to debit the purchaser and credit profit and loss with the profit. If the stock regularly traded in is sold at a profit, no special entry is required; the sale is recorded in the regular way and credited to sales account, from which it finds its way into profit and loss in the final closing of the books. This class of transactions involves but one of the many kinds of adjusting entries, all of which necessitate careful study on the part of the bookkeeper. In making adjusting entries, full explanations should be given that their meaning or intent may not be misunderstood by one who later refers to them. It is better to err on the side of what may appear as too detailed explanation, than to leave anything to be taken for granted. Following is an illustration of the entry involving the sale of fixtures at 10% discount: Profit and Loss $100.00 Fixture Account $100.00 10% discount allowed on fixtures taken by A in part payment of his share of assets A's Capital _a/c_ $900.00 Fixture Account $900.00 Fixtures taken at 10% discount in part payment of his share of assets. =40.= Benton and Douglas agree to continue the business and to share profits equally. At the close of business, Dec. 31, their balance sheet showed the following: BALANCE SHEET, DEC. 31 _Assets_ Cash In office $144.60 In bank 1,287.20 $1,431.80 -------- Accounts Receivable 810.00 Inventory, Merchandise 3,769.50 4,579.50 -------- Inventory, Fixtures 2,000.00 2,000.00 -------- Total Assets $8,011.30 _Liabilities_ Accounts Payable 925.20 -------- Present Worth $7,086.10 Benton's present worth $3,543.05 Douglas's present worth 3,543.05 They accept an opportunity to sell for cash the stock and fixtures, the buyer agreeing to pay 15% above cost price for the merchandise, and cost price for the fixtures. The money received from this transaction, and the money in the office at time of sale, are deposited in the bank. Checks are drawn to settle all accounts payable, $7.22 discount being earned. In liquidating the business of the firm, Benton agrees to accept the accounts receivable in part payment of his share, on condition that 10% be first charged off to cover uncollectable accounts. EXERCISE