User Guide

Accounting Manual 15–1
Amc15.doc, printed on 12/05/97, at 12:01 PM. Last saved on 12/05/97 10:11 AM.
Confidential ACCPAC International
Chapter 15
Other Types of Legal
Organizations
There are two other principal forms of companies: partnerships
and corporations. The accounting for them is exactly the same
as for a proprietorship (National Construction) except that the
equity section is set up a little differently for each.
Partnerships
Each partner who invests money in a company has an Invested
Capital account in his name. Let's look at an example where we
assume that Jim Brown takes on a partner in National
Construction.
Brown's equity in the company is $78,000 ($48,000 invested plus
$30,000 earned). Because he is about to take on a partner, he
adjusts the accounts so that Previous Years' Earnings are now
shown as part of his investment.
The journal entry for this is:
Feb 1, 96 Previous Years' Earnings
Jim Brown, Invested Capital
To close P.Y.E. into Brown's Capital
3600
3300
30,000
30,000
The equity section of the balance sheet now looks like this:
Equity
Jim Brown 78,000