Question

only C. note the check figure for the entry says 6,000 cannot get that amount.

CHAPTER 11 Partnerships ALTERNATE PROBLEMS Problem 11-1B Methods of allocating partnership profit LO3 Xcel CHECK FIGURE: C. Dr. Lister, Capital: $6,000 Phung, Moier, and Lister invested $130,000, $150,000, and $120,000, respectively, into an organic farm to res- taurant distribution business. During its first year, the firm earned $25,000. Required Prepare entries to close the firm's Income Summary account as of December 31 and to allocate the profit to the partners under each of the following assumptions. a. The partners did not specify any special method of sharing profit. b. The partners agreed to share profit and losses in the ratio of their beginning investments. c. The partners agreed to share profit by providing annual salary allowances of $75,000 to Phung, $40,000 to Moier, and $40,000 to Lister, allowing 20% interest on the partners' beginning investments, and sharing the remainder equally. Problem 11-2B Allocating partnership profits and losses; sequential years Lo3 excel CHECK FIGURES: d. Year 1: Bosch: $(25,750); Gilbert: $110,750; d. Year 2: Bosch: $190,750); Gilbert: $45,750; d. Year 3: Bosch: $105,750; Gilbert: $242,250 of forming a golf course equipment maintenance company. Bosch will

Answer 1

c)

	Phung	Moier	Lister	Total
Salary allowance	75,000	40,000	40,000	155,000
Interest allowance	26,000	30,000	24,000	80,000
Total	101,000	70,000	64,000	235,000
Remaining loss	- 70,000	- 70,000	- 70,000	- 210,000
Net income	$31,000	$0	- $6,000	25,000

Journal

	Income summary	25,000
	Capital, Lister	6,000
	Capital, Phung		31,000

Total of salaries and interest allowance = $235,000

Net income = $25,000

Remaining loss = Net income - Total of salaries and interest allowance

= 25,000 - 235,000

= - $210,000

Phung's share of loss = 210,000 x 1/3

= $70,000

Moier's share of loss = 210,000 x 1/3

= $70,000

Lister's share of loss = 210,000 x 1/3

= $70,000

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