Subscriptions 20,000.00 Capital stock 20,000.00 Subscriptions received as per subscription books. -------- Cash 1,650.72 Bills receivable 1,725.00 Accounts receivable 3,264.18 Merchandise inventory 10,450,00 Furniture and fixtures 4,000.00 Goodwill 4,000.00 Bills payable 3,000.00 Accounts payable 2,089.90 Subscriptions 20,000.00 The business and goodwill of the firm of Wilson, Brackett, and Nixon transferred to this company in payment of subscriptions to capital stock. These entries serve to get the capital stock, also the assets and liabilities of the partnership properly recorded on the books of the new company. STOCK DONATED TO EMPLOYES =40.= A partnership composed of Benson, Black, and Mabley is conducting a retail hardware business. They desire to give their bookkeeper (Parker) an interest in the business. The firm has the following assets and liabilities: _Assets_ Cash $3,000.00 Accounts receivable 2,000.00 Merchandise 15,000.00 Total assets $20,000.00 _Liabilities_ Accounts payable 2,000.00 Benson capital 6,000.00 Black capital 6,000.00 Mabley capital 6,000.00 Total liabilities 20,000.00 They incorporate the Benson Company with a capitalization of $40,000.00 divided into 400 shares of $100.00 each. Benson, Black, and Mabley each subscribe for 100 shares, and 20 shares are presented to Parker. The balance of the stock is to remain unsubscribed until such time as it is decided to accept further subscriptions. The business of the partnership is to be accepted by the company in payment of subscriptions which have been made, and which are for 320 shares or $32,000.00. The net assets of the partnership being $18,000.00, goodwill must represent the balance of $14,000.00. The entries on the books of the partnership follow-- The Benson Co. $20,000.00 Cash $ 3,000.00 Accounts receivable 2,000.00 Merchandise inv. 15,000.00 -------- Accounts payable 2,000.00 Benson 6,000.00 Black 6,000.00 Mabley 6,000.00 The Benson Co. 20,000.00 =41. On Books of the Benson Co.= The entries on the books of the new company are the same as in previous illustrations, the stock donated to Parker having been a gift from the partnership and the amount included in the goodwill.