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Solved Problem: Answers: 1. Stockholders 2. Tax 3. Retained Earnings 4. Participate 5
Solved Problem: Answers: 1. Stockholders 2. Tax 3. Retained Earnings 4. Participate 5
Solved Problem
Solved Problem 17.1 Two separate business organizations, a partner
ship and a corporation, were formed on January 1, 2001.
1. The initial investments of the partners, Blue and Gray, were
$25,000 and $20,000, respectively.
2. The Green Corporation has ve stockholders, each owning 90
shares of $100-par common stock.
At the end of the calendar year, the net income of each company was
$15,000. (a) For each organization, show the proper entry to close the In
come Summary account. (b) Prepare a capital statement for the partner
ship and a stockholders equity statement for the corporation, as of De
cember 31, 2001.
Solution:
(a) Partnership Entry:
Income Summary
Blue, Capital
Gray, Capital
Corporation Entry:
Income Summary
Retained Earnings
15,000
7,500
7,500
15,000
15,000
Total
45,000
15,000
60,000
45,000
15,000
60,000