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9 marksPreparation of Corporate Financial Statements

CAPE Accounting Unit 1 · 2021 · Paper 2 · Question 2(d)(ii)

After five years, on 31 December 2020, Joe and Bill decide to seek additional financing by incorporating as Advanced Marketing Inc., issuing 30,000 $5 par value ordinary shares distributed evenly among Joe, Bill, and Jill based on the given balance sheet and fair values.

Prepare the opening balance sheet of the new company, Advanced Marketing Inc., as at 1 January 2021.

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Other parts of this question

  1. 2(a)(i)State TWO main characteristics of a Partnership that may be appropriate for Joe's new business.[2 marks]
  2. 2(a)(ii)State TWO main characteristics of a Private company that may be appropriate for Joe's new business.[2 marks]
  3. 2(a)(iii)State TWO main characteristics of a Public company that may be appropriate for Joe's new business.[2 marks]
  4. 2(b)Prepare the journal entry to record the formation of the partnership.[5 marks]
  5. 2(c)List FOUR additional terms, other than those mentioned in the case, which may be found in the formal partnership agreement.[4 marks]
  6. 2(d)(i)Prepare the entries to record the incorporation, assuming that the new company issues all 30,000 of the ordinary shares.[11 marks]

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