Question 1

Dailey Company at December 31 has cash $40,000, noncash assets $200,000, liabilities $110,000, and the following capital balances: Dickinson $90,000 and Meierhoff $40,000. The firm is liquidated, and $240,000 in cash is received for the noncash assets. Dickinson and Meierhoff income ratios are 60% and 40%, respectively.
Instructions
Prepare a cash distribution schedule.

Accepted Answer

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

Question 2

Jan Penny and Barb Gant have formed the PG Partnership, and have capital balances of $130,000 and $100,000, respectively, on January 1, 2010. On June 1, 2010, Gant invested an additional $30,000. Also during the year, Penny withdrew $60,000 and Gant withdrew $48,000. Sales for the year amounted to $360,000 and expenses were $260,000. Penny and Gant share income and losses on a 3:1 basis.
Instructions
(a) Prepare the closing entries at December 31, 2010, for the PG Partnership.
(b) Prepare a partners' capital statement for 2010.

Accepted Answer

The answer of Jan Penny and Barb Gant have formed...

Question 3

Cain, Foley, and Hardy formed a partnership on January 1, 2010. Cain invested $60,000, Foley $60,000 and Hardy $140,000. Cain will manage the store and work 40 hours per week in the store. Foley will work 20 hours per week in the store, and Hardy will not work. Each partner withdrew 30 percent of his income distribution during 2010. 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 2010 under the following independent conditions: (Hint: Use T accounts to determine each partner's capital balances.)
(1) Net income is $120,000 and the income ratio is Cain 40%, Foley 35%, and Hardy 25%.
(2) Net income is $140,000 and the partnership agreement only specifies a salary of $50,000 to Cain and $30,000 to Foley.
(3) Net income is $86,000 and the partnership agreement provides for (a) a salary of $40,000 to Cain and $40,000 to Foley, (b) interest on beginning capital balances at the rate of 10%, and (c) any remaining income or loss is to be shared by Cain 40%, Foley 35%, and Hardy 25%.

Accepted Answer

The answer of Cain, Foley, and Hardy formed a partnership...

Question 4

Decker and Mader have a partnership agreement which includes the following provisions regarding sharing net income or net loss:
1. A salary allowance of $54,000 to Decker and $36,000 to Mader.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 60% to Decker and 40% to Mader.
The capital balance on January 1, 2010, for Decker and Mader was $90,000 and $120,000, respectively. During 2010, the Decker and Mader Partnership had sales of $495,000, cost of goods sold of $290,000, and operating expenses of $75,000.
Instructions
Prepare an income statement for the Decker and Mader Partnership for the year ended December 31, 2010. As a part of the income statement, include a Division of Net Income to each of the partners.

Accepted Answer

The answer of Decker and Mader have a partnership agreement...

Question 5

The Jones and Yancey partnership reports net income of $45,000. Partner salary allowances are Jones $18,000 and Yancey $12,000. Any remaining income is shared 60:40.
Instructions
Determine the amount of net income allocated to each partner.

Accepted Answer

The answer of The Jones and Yancey partnership reports net...

Question 6

Northern Co. had beginning capital balances on January 1, 2010, as follows: Andy Golic $30,000 and Jim Carney $25,000. During the year, drawings were Golic $15,000 and Carney $8,000. Net income was $50,000, and the partners share income equally.
Instructions
Prepare the partners' capital statement for the year.

Accepted Answer

The answer of Northern Co. had beginning capital balances on...

Question 7

Mark Bahr and Robert Engler decide to form a partnership. Bahr invests $25,000 cash and accounts receivable of $30,000 less allowance for doubtful accounts of $2,000. Engler contributes $20,000 cash and equipment having a $6,000 book value. It is agreed that the allowance account should be $3,000 and the fair market value of the equipment is $10,000.
Instructions
Prepare the necessary journal entry to record the formation of the partnership.

Accepted Answer

The answer of Mark Bahr and Robert Engler decide to...

Question 8

In Taylor Co., capital balances are Oscor $60,000 and Glenda $75,000. The partners share income equally. Jared is admitted to the firm with a 40% interest by an investment of cash of $65,000. Journalize the admission of Jared.

Accepted Answer

The answer of In Taylor Co., capital balances are Oscor...

Question 9

Fink & Elston Co. reports net income of $34,000. The partnership agreement provides for annual salaries of $24,000 for Fink and $15,000 for Elston and interest allowances of $4,000 to Fink and $6,000 to Elston. Any remaining income or loss is to be shared 70% by Fink and 30% by Elston.
Instructions
Compute the amount of net income distributed to each partner.

Accepted Answer

The answer of Fink & Elston Co. reports net income...

Question 10

Pinella (beginning capital, $80,000) and H. Johnston (beginning capital $120,000) are partners. During 2010, the partnership earned net income of $90,000, and Pinella made drawings of $24,000 while Johnston made drawings of $32,000.
Instructions
(a) Assume the partnership income-sharing agreement calls for income to be divided 45% to Pinella and 55% to Johnston. 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 $40,000 to Pinella and $35,000 to Johnston, with the remainder divided 45% to Pinella and 55% to Johnston. 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 $55,000 to Pinella and $45,000 to Johnston, 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

The answer of Pinella (beginning capital, $80,000) and H. Johnston...

Question 11

Ace, Goran, and Notte are forming The Acgono Partnership. Ace is transferring $45,000 of personal cash and equipment worth $38,000 to the partnership. Goran owns land worth $27,000 and a small building worth $112,000, which he transfers to the partnership. There is a long-term mortgage of $30,000 on the land and building, which the partnership assumes. Notte transfers cash of $10,000, accounts receivable of $54,000, supplies worth $5,000, and equipment worth $33,000 to the partnership. The partnership expects to collect $48,000 of the accounts receivable.
Instructions
Prepare a classified balance sheet for the partnership after the partner's investments on December 31, 2010.

Accepted Answer

The answer of Ace, Goran, and Notte are forming The...

Question 12

Flaherty, P. Denny, and G. Newman are forming a partnership. Flaherty is transferring $75,000 of personal cash to the partnership. Denny owns land worth $22,000 and a small building worth $120,000, which she transfers to the partnership. Newman transfers to the partnership cash of $14,000, accounts receivable of $48,000 and equipment worth $28,000. The partnership expects to collect $43,000 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 Flaherty, P. Denny, and G. Newman are...

Question 13

Santo Company and Renfro Company decide to merge their proprietorships into a partnership called Crestwood Company. The balance sheet of Renfro Company shows:  
The partners agree that the net realizable value of the receivables is $12,500 and that the fair market value of the equipment is $15,000.
Instructions
Indicate how the four accounts should appear in the opening balance sheet of the partnership.

Accepted Answer

The answer of Santo Company and Renfro Company decide to...

Question 14

The adjusted trial balance of the Melton and Yount Partnership for the year ended December 31, 2010, 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 $12,000 to Melton and $23,000 to Yount.
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 drawing accounts at December 31, 2010.

Accepted Answer

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

Question 15

The Frick & Frack Co. reports net income of $28,000. Interest allowances are Frick $3,000 and Frack $5,000; partner salary allowances are Frick $18,000 and Frack $10,000 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 Frick & Frack Co. reports net...

Question 16

Ron and Linda are partners who share profits 60% and 40%. Their capital balances were both $90,000 before Kelly was admitted to the partnership. Kelly contributed $120,000 in cash to the partnership for a 30% interest.
Instructions
Compute the capital balances of Ron and Linda after Kelly is admitted to the partnership.

Accepted Answer

The answer of Ron and Linda are partners who share...

Question 17

Capital balances in Carson Co. are Donald $50,000, Anne $38,000, and Harry $25,000. The partners share income equally. Harry receives $35,000 from partnership assets in withdrawing from the firm.
Instructions
Journalize the withdrawal of Harry.

Accepted Answer

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

Question 18

Joe Mann and Sam Trane operate separate auto repair shops. On January 1, 2010, they decide to combine their separate businesses which were operated as proprietorships to form M & S Auto Repair, a partnership. Information from their separate balance sheets is presented below:  
It is agreed that the expected realizable value of Mann's accounts receivable is $8,000 and Trane's receivables is $7,000. The fair market value of Mann's equipment is $13,000 and the value of Trane's equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Trane'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 Joe Mann and Sam Trane operate separate...

Question 19

After liquidating noncash assets and paying creditors, account balances in the Main Co. are Cash $29,000, A Capital (Cr.) $11,000, B Capital (Cr,) $8,000 and C Capital (Cr.) $10,000. The partners share income equally.
Instructions
Journalize the final distribution of cash to the partners.

Accepted Answer

The answer of After liquidating noncash assets and paying creditors,...

Question 20

Nick, Alan, and Tim are partners who share profits 40%, 20%, and 40%. Their capital balances were $630,000, $420,000, and $210,000, respectively, before Tim's retirement. Tim was paid $270,000 from partnership assets to buy his interest.
Instructions
Compute the capital balances of Nick and Alan after Tim has withdrawn.

Accepted Answer

The answer of Nick, Alan, and Tim are partners who...

Quiz 12: Accounting for Partnerships

The Jones and Yancey partnership reports net income of $45,000. Partner salary allowances are Jones $18,000 and Yancey $12,000. Any remaining income is shared 60:40. Instructions Determine the amount of net income allocated to each partner.

In Taylor Co., capital balances are Oscor $60,000 and Glenda $75,000. The partners share income equally. Jared is admitted to the firm with a 40% interest by an investment of cash of $65,000. Journalize the admission of Jared.

Capital balances in Carson Co. are Donald $50,000, Anne $38,000, and Harry $25,000. The partners share income equally. Harry receives $35,000 from partnership assets in withdrawing from the firm. Instructions Journalize the withdrawal of Harry.

After liquidating noncash assets and paying creditors, account balances in the Main Co. are Cash $29,000, A Capital (Cr.) $11,000, B Capital (Cr,) $8,000 and C Capital (Cr.) $10,000. The partners share income equally. Instructions Journalize the final distribution of cash to the partners.