3. A and B formed a partnership on Apr. 1, 1902, for 1 year. A invested on Apr. 1, $5000, and B $7000. At the end of 6 months, A withdrew $1000 and B $2000. At the end of the year the net gain was found to be $3600. If the gain was divided in proportion to their average investments, what was each partner's capital on Apr. 1, 1903?

4. Jones and Smith formed a partnership, and agreed to share the gain or loss in proportion to their average investments. On Jan. 1, 1903, each invested $3500. On May 1, Jones added $1500 to his capital, and Smith withdrew $1000. They gained $2400. What was each partner's capital at the end of the year?

5. A. R. Byerly and T. R. Baker formed a partnership on Jan. 1, 1901, for one year, each investing $4000. On Apr. 1, Byerly invested $1000, and on May 1, Baker invested $1500. On July 1, Byerly invested $500, and Baker withdrew $500. At the end of the year, the firm's resources were $18000 and the liabilities $3450. If the gain or loss was divided in proportion to their average investments, what was each partner's share of the net capital on Jan. 1, 1902?

6. A, B, and C formed a partnership on Jan. 1, 1900. it was agreed to allow interest on all investments and to charge interest on all withdrawals at the rate of 6%. A is to share of the gain or loss, B, and C. On Jan. 1, A invested $8000; on Apr. 2, $1500; and on June 12, he withdrew $1400. B invested on Jan. 1, $11000; on May 5, $3500; and on Aug. 10, he withdrew $2500. C invested on Jan. 1, $10000; on Mar. 10, $4000. He withdrew on July 14, $1800, and on Aug. 25, $1200. They dissolved partnership on Oct. 1, 1900. Their loss was $6972. What was each partner's net credit interest and net capital at closing?

In finding the time in problem 6, count the exact number of days.

7. L. F. Gardner, G. A. Rockwood, and A. C. Macdonald formed a partnership on Jan. 1, 1903, with a capital of $20000, of which Gardner put in $8000, Rockwood $7000, and Macdonald $5000. At the end of 4 months Gardner added $2000 to his investment, and 3 months later he withdrew $3000. Rockwood, at the end of 5 months, added $1000, and 4 months later he added $2000 to his capital. Macdonald, after 2 months in the business, withdrew $1500; but after being in business 6 months he added $4000 to his capital. The net gain of the firm at the end of the year was $9000. If the gain was divided according to average investment, what was each partner's capital on Jan. 1, 1904?

BANKRUPTCY,

644. A Bankrupt, or Insolvent, is a person who fails in business and is unable to pay his debts.

A person may by due process of law declare himself in a state of bankruptcy, or may be adjudged a bankrupt at the instigation of one or more of his creditors. Firms and corporations when unable to meet their pecuniary obligations are subject to the same legal proceedings as a single individual who is insolvent.

845. The Assets of a bankrupt are his entire property including all debts due him.

Available Assets are such as can be converted immediately into cash. Nominal Assets are those which cannot be converted into cash, except at a discount. A debtor of a bankrupt is a person or firm who owes him.

846. The Liabilities of a bankrupt are all of the obligations due by him to his creditors.

An

A Creditor is one to whom the bankrupt is indebted. A preferred creditor is one who is paid in full if the assets are sufficient for this purpose. employee is a preferred creditor.

847. A Statement, or Schedule, is a list of the assets and liabilities of the bankrupt, giving the names of his creditors and debtors, their place of business or residence, and the sum due each or from each of them.

848. An Assignee is a person appointed to take charge of the property of a bankrupt for the purpose of converting it into cash and, after deducting the necessary expenses of the assignment, to pay such a proportion of the liabilities to the creditors as the assets will allow.

When a corporation becomes bankrupt, the person appointed to take charge is called a Receiver.

849. A Dividend is the portion of the assets which is paid by the assignee to the creditors.

850. A Discharge is a decree relieving the bankrupt from further indebtedness to his creditors after he has complied with the full requirements of the insolvent laws.

A bankrupt who receives a discharge may begin business anew legally free from all obligations under the former business.

851. Computations in Bankruptcy may be made in accordance with the principles of percentage by regarding the total liability as the base and the available assets as the percentage.

852. To find each creditor's share of available assets.

1. A bankrupt's assets were as follows: Cash, $1534.27; Merchandise, $2150.43; Bills Receivable, $1050; and Accounts Receivable, $1735.30. His liabilities were the following: Due A. B Hughes & Co., $4250; due G. E. King & Co., $2135; and due C. P. Prime & Co., $1475. The expenses of the assignment were $182. How much did each of the creditors receive?

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RULE. From the total assets deduct the expenses of the assignment, and divide by the total liabilities. The quotient will be the rate of dividend.

Multiply the amount of each creditor's claim by the rate of dividend.

Each creditor's share of the assets may be found by the following proportion Total liabilities: Each liability: Net assets: Each creditor's share of the net assets.

2. A merchant failed with liabilities amounting to $18230. His assets amounted to $12852. How much should each creditor receive on the dollar, the expenses of assignment being $380? How much was allowed L. K. Wise & Co., whose claim was $1500?

3. A firm failed with liabilities amounting to $30000. The assets were, Cash, $1875; Real Estate, $6500; Bills Receivable, $1250; Accounts Receivable, $3475. The expenses of the assignment were $315. How much should D. M. Keefer receive whose claim against the firm was $2350?

4. N. G. Bragg & Co. failed with liabilities amounting to $150000. The assets of the firm amounted to $56750. The assignee's charges were $2800. How much did F. Albert receive who had a claim against the firm for $20000?

5. A leather firm failed with liabilities amounting to $42500. The assets were $27345. If the expenses for settling were $495, how much should D. C. Morrison, F. H. Slyder, and H. A. Bitner receive, whom the firm owed $5263, $6587, and $7345 respectively?

6. Mull & Co. placed in the hands of an assignee, for the benefit of their creditors, a stock of finished goods which sold for $21000, raw material which sold for $2700, and personal property which sold for $3800. Their liabilities were $46420. The assignee's charges were 5% of the assets. How much did each creditor re

ceive on the dollar?

7. The total liabilities of a firm which failed were $38450. The machinery owned by the firm was sold for $15600. The company had on hand manufactured goods which sold for $3150, and raw material which brought $1750. The real estate belonging to the firm consisted of a building and lot which sold for $5400, and a tract of timber land which brought $1175. The assignee also collected on notes and personal accounts $2850. The expenses of the assignment were $925. What dividend was paid to the creditors, and how much did G. W. Hull receive whose claim was $5750?

8. Lane, Root & Co. failed in business. Their liabilities amounted to $80000. The assets of the firm were, real estate, worth $22,000; stock of goods, worth $8000; notes on hand, worth $1500; personal accounts due the firm, $825; and cash, $425. The assignee's charges amounted to 5% on the sum distributed to the creditors. How much could the firm pay on the dollar?

9. Slow & Co. failed, owing John Horst $18750, Samuel Stumbaugh $15000, and Elmer Reynolds $12500. The assets of the firm were $19762, exclusive of the real estate. The expenses of settling were $1850. They owed their employees $2750, which was paid in full. The real estate was sold for $15000. What per cent. of their claims was paid Horst, Stumbaugh, and Reynolds, and how much did each receive?

AVERAGE OF ACCOUNTS

853. An Account is a record of business transactions, and may contain either debits or credits or both.

854. Average of Accounts, or Equation of Payments, is the process of finding the time when sums due at different times may be settled with one payment, without loss of interest to either debtor or creditor.

855. The Cash Balance is the sum required to settle an account at a specified time, when part payment has already been made. 856. The Term of Credit is the time allowed for the payment of a debt.

All accounts bear legal interest after their term of credit expires. 857. The Average Term of Credit is the average time allowed for the payment of two or more sums due at different dates.

858. The Focal Date is any assumed date with which the dates of two or more payments are compared to find their average date. 859. The Equated Time, or Average Date, is the date on which several debts due at different times may be paid in one sum.

SIMPLE AVERAGE.

860. Simple average is the process of averaging accounts containing debit or credit items only.

The process consists in assuming a certain date as the date of settlement, and finding what the gain or loss would be to the payer if all the bills were paid by him on that date; then in finding in how many days the total amount of the bills would produce a sum equivalent to this gain or loss of interest. The true, or average, date of settlement is then found by counting this number or days forward or backward from the assumed date.

The interest on bills paid after they are due, should equal the interest on bills paid before their term of credit expires, since the former is a gain to the payer and the latter a loss.

Any date may be assumed as the focal date, or time of settlement, and any rate of interest may be used in making the computations, though the latest maturity of any item in the account is perhaps the most convenient date, and 6% the most convenient rate.