Question 1

Appalachian Company at December 31 has cash $40000 noncash assets $200000 liabilities $110000 and the following capital balances: Hoffman $90000 and Mena $40000. The firm is liquidated and $220000 in cash is received for the noncash assets. Hoffman and Mena income ratios are 60% and 40% respectively.
Instructions
Prepare a cash distribution schedule.

Accepted Answer

The answer of Appalachian Company at December 31 has cash...

Question 2

Carraway and Boos have a partnership agreement which includes the following provisions regarding sharing net income or net loss:
1. A salary allowance of $48000 to Carraway and $36000 to Boos.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 60% to Carraway and 40% to Boos.
The capital balance on January 1 2017 for Carraway and Boos was $90000 and $120000 respectively. During 2017 the Carraway and Boos Partnership had sales of $495000 cost of goods sold of $290000 and operating expenses of $85000.
Instructions
Prepare an income statement for the Carraway and Boos Partnership for the year ended December 31 2017. As a part of the income statement include a Division of Net Income to each of the partners.

Accepted Answer

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Question 3

Rich Tracy and Mark are partners who share profits 40% 20% and 40%. Their capital balances were $630000 $420000 and $210000 respectively before Mark's retirement. Mark was paid $240000 from partnership assets to buy his interest.
Instructions
Compute the capital balances of Rich and Tracy after Mark has withdrawn.

Accepted Answer

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Question 4

The Fig & Olive Co. reports net income of $24000. Interest allowances are Fig $3000 and Olive $5000; partner salary allowances are Fig $18000 and Olive $10000 and the remainder is shared equally.
Instructions
Indicate the division of net income to each partner and prepare the entry to distribute the net income.

Accepted Answer

The answer of The Fig & Olive Co. reports net...

Question 5

Capital balances in Carson Co. are Dene $50000 Aneta $38000 and Harriet $25000. The partners share income equally. Harriet receives $31000 from partnership assets in withdrawing from the firm.
Instructions
Journalize the withdrawal of Harriet.

Accepted Answer

The answer of Capital balances in Carson Co. are Dene...

Question 6

Pellah (beginning capital $80000) and M. Berry (beginning capital $120000) are partners. During 2017 the partnership earned net income of $90000 and Pellah made drawings of $24000 while Berry made drawings of $32000.
Instructions
(a) Assume the partnership income-sharing agreement calls for income to be divided 40% to Pellah and 60% to Berry. Prepare the journal entry to record the allocation of net income.
(b) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $40000 to Pellah and $35000 to Berry with the remainder divided 40% to Pellah and 60% to Berry. Prepare the journal entry to record the allocation of net income.
(c) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $50000 to Pellah and $45000 to Berry interest of 10% on beginning capital and the remainder divided 50%-50%. Prepare the journal entry to record the allocation of net income.
(d) Compute the partners' ending capital balances under the assumption in part (c).

Accepted Answer

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Question 7

Juanita Gomez and Brandi Toomey have formed the GT Partnership and have capital balances of $130000 and $100000 respectively on January 1 2017. On June 1 2017 Toomey invested an additional $30000. Also during the year Gomez withdrew $60000 and Toomey withdrew $48000. Sales for the year amounted to $360000 and expenses were $240000. Gomez and Toomey share income and losses on a 3:1 basis.
Instructions
(a) Prepare the closing entries at December 31 2017 for the GT Partnership.
(b) Prepare a partners' capital statement for 2017.

Accepted Answer

The answer of Juanita Gomez and Brandi Toomey have formed...

Question 8

In BigEasy Co. capital balances are Adrienne $60000 and Dino $75000. The partners share income equally. Javier is admitted to the firm with a 40% interest by an investment of cash of $85000. Journalize the admission of Javier.

Accepted Answer

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Question 9

The Jamison and Stephens partnership reports net income of $50000. Partner salary allowances are Jamison $18000 and Stephens $12000. Any remaining income is shared 60:40.
Instructions
Determine the amount of net income allocated to each partner.

Accepted Answer

The answer of The Jamison and Stephens partnership reports net...

Question 10

Barr & Eglin Co. reports net income of $42000. The partnership agreement provides for annual salaries of $24000 for Barr and $18000 for Eglin and interest allowances of $4000 to Barr and $6000 to Eglin. Any remaining income or loss is to be shared 70% by Barr and 30% by Eglin.
Instructions
Compute the amount of net income distributed to each partner.

Accepted Answer

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Question 11

The adjusted trial balance of the Ricci and Napoli Partnership for the year ended December 31 2017 appears below:  The partnership agreement stipulates that a division of partnership net income or net loss is to be made as follows:
1. A salary allowance of $12000 to Ricci and $23000 to Napoli.
2. The remainder is to be divided equally.
Instructions
(a) Prepare a schedule which shows the division of net income to each partner.
(b) Prepare the closing entries for the division of net income and for the drawings accounts at December 31 2017.

Accepted Answer

The answer of The adjusted trial balance of the Ricci...

Question 12

After liquidating noncash assets and paying creditors account balances in the Main Co. are Cash $29000 Art Capital (Cr.) $11000 Bob Capital (Cr) $8000 and Cam Capital (Cr.) $10000. The partners share income equally.
Instructions
Journalize the final distribution of cash to the partners.

Accepted Answer

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Question 13

Wiggins L. Stokes and K. Hayes are forming a partnership. Wiggins is transferring $75000 of personal cash to the partnership. Stokes owns land worth $25000 and a small building worth $120000 which she transfers to the partnership. Hayes transfers to the partnership cash of $14000 accounts receivable of $48000 and equipment worth $28000. The partnership expects to collect $45000 of the accounts receivable.
Instructions
(a) Prepare the journal entries to record each of the partners' investments.
(b) What amount would be reported as total owners' equity immediately after the investments?

Accepted Answer

The answer of Wiggins L. Stokes and K. Hayes are...

Question 14

Thao and Leslie are partners who share profits 60% and 40%. Their capital balances were both $120000 before Kiley was admitted to the partnership. Kiley contributed $160000 in cash to the partnership for a 30% interest.
Instructions
Compute the capital balances of Thao and Leslie after Kiley is admitted to the partnership.

Accepted Answer

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Question 15

Ando Dadd and Porter formed a partnership on January 1 2017. Ando invested $60000 Dadd $60000 and Porter $140000. Ando will manage the store and work 40 hours per week in the store. Dadd will work 20 hours per week in the store and Porter will not work. Each partner withdrew 40 percent of his income distribution during 2017. If there was no income distribution to a partner there were no withdrawals of cash.
Instructions
Compute the partners' capital balances at the end of 2017 under the following independent conditions: (Hint: Use T accounts to determine each partner's capital balances.)
(1) Net income is $120000 and the income ratio is Ando 40% Dadd 35% and Porter 25%.
(2) Net income is $125000 and the partnership agreement only specifies a salary of $50000 to Ando and $30000 to Dadd.
(3) Net income is $76000 and the partnership agreement provides for (a) a salary of $40000 to Ando and $40000 to Dadd (b) interest on beginning capital balances at the rate of 10% and (c) any remaining income or loss is to be shared by Ando 40% Dadd 35% and Porter 25%.

Accepted Answer

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Question 16

Sonoma Company and Woodberry Company decide to merge their proprietorships into a partnership called Sonberry Company. The balance sheet of Woodberry Company shows: $\begin{array}{lr}
\text { Accounts Receivable } & \$ 18,000 \
\text { Less: Allowance for doubtful accounts } & \underline{1,500}&\$16,500\
\
\text {Equipment}&\$20,000\
\text {Less Accumulated depreciation-equip.}&\underline{10,000}&\$10,000
\end{array}$ The partners agree that the net realizable value of the receivables is $16000 and that the fair value of the equipment is $15000.
Instructions
Indicate how the four accounts should appear in the opening balance sheet of the partnership.

Accepted Answer

The answer of Sonoma Company and Woodberry Company decide to...

Question 17

Actor Brees and Cotswald are forming The ABC Partnership. Actor is transferring $40000 of personal cash and equipment worth $38000 to the partnership. Brees owns land worth $27000 and a small building worth $112000 which he transfers to the partnership. There is a long-term mortgage of $40000 on the land and building which the partnership assumes. Cotswald transfers cash of $10000 accounts receivable of $54000 supplies worth $5000 and equipment worth $28000 to the partnership. The partnership expects to collect $48000 of the accounts receivable.
Instructions
Prepare a classified balance sheet for the partnership after the partner's investments on December 31 2017.

Accepted Answer

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Question 18

Southern Skies Co. had beginning capital balances on January 1 2017 as follows: Patty Sharp $30000 and Jim O'Connor $25000. During the year drawings were Sharp $15000 and O'Connor $8000. Net income was $40000 and the partners share income equally.
Instructions
Prepare the partners' capital statement for the year.

Accepted Answer

The answer of Southern Skies Co. had beginning capital balances...

Question 19

Ron Marden and Tip Baker operate separate auto repair shops. On January 1 2017 they decide to combine their separate businesses which were operated as proprietorships to form M & B Auto Repair a partnership. Information from their separate balance sheets is presented below: $$\begin{array} { l c c } 
& \text { Marden Auto Repair } & \text { Baker Auto Repair } \
\text { Cash } & \$ 10,000 & \$ 14,000 \
\text { Accounts receivable } & 12,000 & 10,000 \
\text { Allowance for doubtful accounts } & 1,000 & 500 \
\text { Accounts payable } & 5,000 & 6,000 \
\text { Notes payable } & - & 3,000 \
\text { Salaries and wages payable } & 1,000 & 1,500 \
\text { Equipment } & 12,000 & 24,000 \
\text { Accumulated depreciation—equipment } & 2,000 & 4,000
\end{array}$$ It is agreed that the expected realizable value of Marden's accounts receivable is $11000 and Baker's receivables is $7000. The fair value of Marden's equipment is $13000 and the value of Baker's equipment is $20000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Baker's balance sheet which he will pay himself.
Instructions
Prepare the journal entries necessary to record the formation of the partnership.

Accepted Answer

The answer of Ron Marden and Tip Baker operate separate...

Question 20

Michelle Hamilton and Bill Rossi decide to form a partnership. Hamilton invests $35000 cash and accounts receivable of $30000 less allowance for doubtful accounts of $2000. Rossi contributes $25000 cash and equipment having a $6000 book value. It is agreed that the allowance account should be $3000 and the fair value of the equipment is $10000.
Instructions
Prepare the necessary journal entry to record the formation of the partnership.

Accepted Answer

The answer of Michelle Hamilton and Bill Rossi decide to...

Quiz 12: Accounting for Partnerships

Capital balances in Carson Co. are Dene $50000 Aneta $38000 and Harriet $25000. The partners share income equally. Harriet receives $31000 from partnership assets in withdrawing from the firm. Instructions Journalize the withdrawal of Harriet.

In BigEasy Co. capital balances are Adrienne $60000 and Dino $75000. The partners share income equally. Javier is admitted to the firm with a 40% interest by an investment of cash of $85000. Journalize the admission of Javier.

The Jamison and Stephens partnership reports net income of $50000. Partner salary allowances are Jamison $18000 and Stephens $12000. Any remaining income is shared 60:40. Instructions Determine the amount of net income allocated to each partner.

After liquidating noncash assets and paying creditors account balances in the Main Co. are Cash $29000 Art Capital (Cr.) $11000 Bob Capital (Cr) $8000 and Cam Capital (Cr.) $10000. The partners share income equally. Instructions Journalize the final distribution of cash to the partners.