Question

Need Hongren Accounting 10th edition Problem P12-27A solutionnch

On October 1, 2014, Edwards, French, and Gill formed the E, F, G partnership. Edwards contributed $21,000; French, $35,000; and Gill, $44,000, Edwards will manage the store; French will work in the store three- quarters of the time and Gill will not work.

1.	Compute the partners’ shares of profits and losses under each of the following plans:
	a.	Net loss for the year ended September 30, 2015 is $42,000, and the partnership agreement allocates 45% of profits to Edwards, 35% to French, and 20% to Gill. The agreement does not discuss sharing of losses.
	b.	Net income for the year ended September 30, 2015, is $97,000. The first $25,000 is allocated on the basis of relative partner capital balances. The next $48,000 is based on services, with $38,000 going to Edwards and $10,000 going to French. Any remainder is shared equally.
2.	Using plan (b), prepare the partnership statement of partners’ equity. Assume Edwards, French, and Gill each withdrew $10,000 from the partnership during the year.

Answer 1

1)

Particulars	Edwards	French	Gill	Total
% of Allocation	0.45	0.35	0.20
% of Allocation * Amount of loss loss	$ (18,900.00)	$ (14,700.00)	$ (8,400.00)	$ (42,000.00)

	Edward	French	Gill	Total
Capital as on October 1, 2014,	$ 21,000.00	$ 35,000.00	$ 44,000.00	$ 100,000.00
Net Income as on September 30, 2015	$ (18,900.00)	$ (14,700.00)	$ (8,400.00)	$ (42,000.00)
Balance	$ 2,100.00	$ 20,300.00	$ 35,600.00	$ 58,000.00

2)

	Edwards	French	Gill	Total
Capital as on October 1, 2014	$21,000	$35,000	$44,000	$100,000
Net income (loss)				$97,000
Capital allocation with first $25,000:
Edwards (21,000/ 100,000 * 25,000)	$5,250
French (35000/100,000 * 25,000)		$8,750
Gill (44,000 * 100,000 * 25,000)			$11,000
Salary Allowances:
Edwards	$38,000
French		$10,000
Total salary plus capital allocation	$43,250	$18,750	$11,000	$73,000
Net income (loss) to be allocated:				$24,000
Remainder shared equally:
Edwards (28,750*1/3)	$8,000
French (28,750*1/3)		$8,000
Gill (28,750*1/3)			$8,000
Net Income allocation to each partner	$51,250	$26,750	$19,000

3)

Statement of Partners equity
Particulars	Edwards	French	Gill	Total
Capital as on October 1, 2014	$21,000	$35,000	$44,000	$100,000
Net Income as on September 30, 2015	$51,250	$26,750	$19,000	$97,000
Balance	$72,250	$61,750	$63,000	$197,000