Solution to Syndicate Problem;

              34 HASKINS & SELLS May
Solution to Syndicate Problem
THIS problem is very misleading with
regard to the time required to work it
out. In glancing over it casually, it ap­pears
to be easy and solvable in a short
time. Once the work is started, the com­plications
become apparent.
In the solution which follows no attempt
has been made to take into consideration
the taxes on sales of stock, since no men­tion
of such taxes was made in the prob­lem.
This point is one of detail which
might be considered if the facts were pre­sented,
but which does not have any effect
upon the principles involved in the prob­lem.
In a stock brokerage house where the
volume of transactions is sufficient to war­rant,
there would appear on the books a
controlling account for securities. In an in­stance
like the present one where the se­curities
are few in number, it is prefer­able
to use individual accounts.
The transactions stated in terms of jour­nal
entries, together with the closing en­tries,
are as follows:
1918
Jan. 1. Cash $75,000.00
F. B. Arnold, Capital $25,000.00
A. S. Burke, Capital 25,000.00
G. M. Campbell,
Capital 25,000.00
Jan. 17. Prairie Oil & Gas 45,012.50
Cash 45,012.50
100 shares @ 450 + 1/8
purchased
Apr. 3. Seneca Petroleum 5,650.00
Cash 5,650.00
400 shares @ 14 + 1/8
purchased
Hazeltine Copper 11,082.50
Cash 11,082.50
20 shares @ 554 + 1/8
purchased
Ap. 10. Cash 11,057.50
Hazeltine Copper... 11,057.50
20 shares @ 553 + 1/8
sold
May 28. Prairie Oil & Gas 49,212.50
Cash
100 shares @ 492 + 1/8
purchased
Ju. 30. Cash
Interest on Bank Bal­ance
97.23
Sept. 30. Cash 2,000.00
Dividends on Stocks
Oct. 18. Cash 6,350.00
Seneca Petroleum ..
400 shares @ 16 —
1/8 sold
Oct. 19. Prairie Oil & Gas 11,575.00
G. M. Campbell,
Capital
Reserve for Ap­preciation
of Se­curities
Revaluation of Prairie
Oil & Gas stock at time
of Campbell's with­drawal
Dividend Receivable . . .
Dividends on Stocks
Anticipated dividend on
Prairie Oil & Gas Stock
Interest on Loan Payable
Interest Accrued
on Loan Payable..
C L O S I N G E N T R I ES
Profit and L o s s . . . . . . ..
Hazeltine Copper . . .
Interest on Loan
Payable
1,000.00
625.00
650.00
Seneca Petroleum . . . . 700.00
Interest on Bank Bal­ance
97.23
Dividends on Stocks... 3,000.00
Profit and Loss . . . .
Profit and Loss 3,147.23
F. B. Arnold, Capital
A. S. Burke, Capital
G. M. Campbell, Cap­ital
1918
Oct. 19. Cash 20,000.00
May 15. Cash
Loan Payable
30,000.00
30,000.00
F. B. Arnold, Capital
A. S. Burke, Capital
G. M. Campbell, Capital 29,907.40
Cash
Dec. 31. Cash (50 shares P.
O. G. @. 540 — 1/8) ... 26,993.75
Prairie Oil and Gas
(50 shares @ 529)
Profit and Loss . . . .
49,212.50
97.23
2,000.00
6,350.00
3,858.33
7,716.67
1,000.00
625.00
25.00
625.00
3,797.23
1,049.08
1,049.08
1,049.07
10,000.00
10,000.00
29,907.40
26,450.00
543.75