For the final closing of the books, we would close the personal accounts of A and B into their capital accounts, and close profit and loss account into their capital accounts. In actual practice the interest on withdrawals and investment would be entered and charged to profit and loss through interest account, before the net profit is brought down. In our illustration we have first brought down what appears to be the net profit, for the purpose of emphasizing the fact that the interest must be considered before profits are divided. EXERCISE =42.= C, D, and E formed a partnership Nov. 1. C invested $9,000.00 cash; D invested $7,000.00 cash; E invested $4,000.00 cash. The partnership agreement provided that profits should be shared on the basis of the capital invested by each; interest at 6% to be credited on capital and charged on withdrawals. At the close of business the following statistics are gathered from the books: C's Capital _a/c_ Cr. $9,000.00 D's Capital _a/c_ Cr. 7,000.00 E's Capital _a/c_ Cr. 4,000.00 Purchases Dr. 15,000.00 Sales Cr. 12,000.00 Expense Dr. 160.00 Rent Dr. 150.00 Salaries Dr. 700.00 Bank Dr. 7,250.00 Bills Receivable Dr. 6,000.00 Accounts Receivable Dr. 7,220.00 Bills Payable Cr. 3,000.00 Accounts Payable Cr. 2,820.00 C's personal _a/c_ Dr. Nov. 15 $300.00 D's personal _a/c_ Dr. Dec. 1 200.00 E's personal _a/c_ Dr. Nov. 20 100.00 Inventory Dec. 31 7,000.00 Make trading account, profit and loss account, and journal entries to adjust interest. Make balance sheet, and show partners' capital accounts after final closing of the books. [Illustration: A VIEW OF THE NEW YORK GENERAL OFFICES OF THE WESTERN ELECTRIC COMPANY] CORPORATION ACCOUNTS CORPORATIONS =1.= A corporation is an artificial body created by statute law and vested with power to act in many respects as an individual--in particular to acquire, hold, and dispose of property, real or personal; to make contracts; to sue and be sued, and the like. It is a legal entity apart from its members. It may sue without joining its members, and may be sued by others without the necessity of joining its members. It may transfer property and transact all business, not inconsistent with the rights granted by its charter, in its own name. In the transaction of business it is regarded as an individual. CLASSIFICATION OF CORPORATIONS