Question

Kimberly Payne and Arionna Maples decide to form a partnership by combining the assets of their separate businesses. Payne contributes the following assets to the partnership: cash, $22,420; accounts receivable with a face amount of $148,390 and an allowance for doubtful accounts of $4,620; merchandise inventory with a cost of $84,200; and equipment with a cost of $146,270 and accumulated depreciation of $45,790.

The partners agree that $5,580 of the accounts receivable are completely worthless and are not to be accepted by the partnership, that $5,260 is a reasonable allowance for the uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded at the current market price of $108,260, and that the equipment is to be valued at $86,600.

On December 1, journalize the partnership’s entry to record Payne’s investment. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTS
Payne and Arionna Maples
General Ledger
ASSETS 110 Cash 111 Petty Cash 112 Accounts Receivable 113 Allowance for Doubtful Accounts 114 Interest Receivable 115 Notes Receivable 116 Merchandise Inventory 117 Office Supplies 118 Store Supplies 119 Prepaid Insurance 120 Land 123 Equipment 124 Accumulated Depreciation-Equipment 129 Asset Revaluations 133 Patent LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Kimberly Payne, Capital 311 Kimberly Payne, Drawing 312 Arionna Maples, Capital 313 Arionna Maples, Drawing	REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Equipment 523 Delivery Expense 524 Repairs Expense 529 Selling Expenses 531 Rent Expense 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense

2.

Dividing Partnership Income

Tyler Hawes and Piper Albright formed a partnership, investing $259,200 and $172,800, respectively.

Determine their participation in the year's net income of $384,000 under each of the following independent assumptions:

1. No agreement concerning division of net income.
2. Divided in the ratio of original capital investment.
3. Interest at the rate of 18% allowed on original investments and the remainder divided in the ratio of 2:3.
4. Salary allowances of $68,000 and $94,000, respectively, and the balance divided equally.
5. Allowance of interest at the rate of 18% on original investments, salary allowances of $68,000 and $94,000, respectively, and the remainder divided equally.

	Hawes	Albright
(a)	$	$
(b)	$	$
(c)	$	$
(d)	$	$
(e)	$	$

3.

1. Dividing LLC Income

   Martin Farley and Ashley Clark formed a limited liability company with an operating agreement that provided a salary allowance of $56,000 and $45,000 to each member, respectively. In addition, the operating agreement specified an income-sharing ratio of 3:2. The two members withdrew amounts equal to their salary allowances. Revenues were $668,000 and expenses were $520,000, for a net income of $148,000.

   a. Determine the division of $148,000 net income for the year.

   Schedule of Division of Net Income
   	Farley	Clark	Total
   Salary allowance	$	$	$
   Remaining income
   Net income	$	$	$

   b. Provide journal entries to close the (1) revenues and expenses and (2) drawing accounts for the two members. For a compound transaction, if an amount box does not require an entry, leave it blank.

   (1)
   (2)

   c. If the net income were less than the sum of the salary allowances, how would income be divided between the two members of the LLC?

   If the net income of the LLC were less than the sum of the salary allowances,   members would still be credited with their salary allowances. The difference between the net income and total salary allowances would be allocated to each partner as  , according to the   ratio.

Check My Work2 more Check My Work uses remaining.

Answer 1

Solution:-

$\bg_green Note:-$As per HOMEWORKLIB RULES if more than one question is posted than we liable to answer only first question.

1. On December 1, journalize the partnership’s entry to record Payne’s investment:-

Date	Ref. No.	Account title & explanation	Debit	Credit
December 1	110	Cash	22,420
	112	Accounts Receivable	142,810
	113	Allowance for Doubtful Accounts	5,260
	116	Merchandise Inventory	108,260
	123	Equipment	86,600
	310	Kimberly Payne, Capital		365,350

$\bg_green Note:-$As per HOMEWORKLIB RULES if more than one question is posted than we liable to answer only first question.

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