ACCOUNTING II
ASSIGNMENT 3 – CHAPTER 11
PARTNERSHIPS
NAME:
Question 1 (8 Marks)
William and Christie form a partnership by investing $60,000 and $40,000 respectively. Their partnership agreement stipulates that William will receive an annual salary allowance of $6,000, and both partners will receive an interest allowance of 10% on their capital investment. Any profit remaining is to be allocated 60% to William, and 40% to Christie. Profit for their first year of operations is $40,000. Calculate the partners’ share of Net Income and Prepare the entry to close Income Summary. Show all calculations for full marks.
Question 2 (6 Marks)
Lewis and Watson formed a partnership. Lewis contributed $15,000 cash and accounts receivable worth $13,000. Watson's investment included cash, $8,000; inventory, $9,000; and supplies, $1,000. (All values are current fair market values). Prepare the journal entry to record the formation of the partnership.
Question 3 (6 Marks)
Zilky and Justin formed a partnership on December 31, 2013.
Zilky contributed $50,000 cash and accounts receivable with a fair
market value of $10,000. Justin's investment consisted of: cash,
$5,000; inventory, $34,000; and supplies, $1,000-all at fair market
values. Profit for 2014 and 2015 was $50,000 and $65,000,
respectively.
Calculate the allocation of profit for 2014 and 2015, assuming
profits are divided as follows:
(A) The partners have no agreement.
(B) Based on a 1:3 ratio.
(C) Based on the ratio of the partners' original
investments.
Question 4 (10 Marks)
The balance sheet of the partnership of Ray, John and Tracy is presented below. They
share net income and losses equally.
RCT Partnership
Balance Sheet
Cash $ 5,000 Accounts payable $10,000
Inventory 80,000 Ray, Capital 20,000
John, Capital 40,000
_ Tracy, Capital 15,000
Total $ 85,000 Total $85,000
Required:
Prepare all necessary journal entries for each of the following independent situations.
1. R, J and T agree to admit W. W purchases one-half of the equity interest of John and pays John $20,000 cash personally.
2. R, J and T agree to admit W to a one-half equity interest in the partnership if she invests $45,000 cash into the partnership. Refer to the original data.
3. John wishes to retire. The partnership will pay John $30,000 for his equity.
John really wants to retire. Refer to the original data.
Answer all HH and נR are fashion designers who agreed to form a partnership to open a dothing store. An attorney prepares the partnership agreement, indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be assumed at book value. The assets contributed by each partner and the liabilities assumed by the partnership follow. Assets Cash Accounts receivable Allowance for uncollectible accounts Book value Allowance for uncollectible accounts Fair Value Supplies...
Partnership - Formation & Organization In the 1st of January 2020, A, B and C conducted an agreement to form a partnership titled ABC Trading & Shipping. Ltd. Total capital of the company is $ 300,000 divided equally. Each partner offers his share as follows: • Partner (A): paid all his contribution in cash. • Partner (B): offers his contribution in kind as follows: Land $ 50,000 Furniture 20,000 and inventory 40,000 Partner (C): gives up his proprietorship for the...
SELECT THE BEST ANSWERS (Shows computations and references are required) Use the following information to answer the question(s) below. Lola, Melvin, and Nettie are in the process of liquidating their partnership. Since it may take several months to convert the other assets into cash, the partners agree to distribute all available cash immediately, except for $12,000 that is set aside for contingent expenses. The balance sheet and residual profit and loss sharing percentages are as follows: $ Cash Other assets...
1.7 Amie revers Aster and Amerforming a parshin by combining their businesses. Their books show the following: Aster Cash P 72.000 P 30,000 Accounts Receivable 150,000 108,000 Merchandise Inventory 240,000 156,000 Furniture and Fixtures 330,000 102,000 Prepaid Expenses 63.000 21.000 Accounts Payable 366,000 144,000 Aster, Capital 489.000 Amie, Capital 273,000 COURS se or los tner It has been agreed to recognize uncollectible accounts of P7,500 and P5,400 to each party, respectively, and that the furniture and fixtures of Amie are...
MC 2-8 to MC 2-20 MC 2-12, MC 2-13, MC 2-14, MC 2-15 MC 2-12, MC 2-13 , MC 2-14, MC 2-15 1.7 Amie revers Aster and Amerforming a parshin by combining their businesses. Their books show the following: Aster Cash P 72.000 P 30,000 Accounts Receivable 150,000 108,000 Merchandise Inventory 240,000 156,000 Furniture and Fixtures 330,000 102,000 Prepaid Expenses 63.000 21.000 Accounts Payable 366,000 144,000 Aster, Capital 489.000 Amie, Capital 273,000 COURS se or los tner It has been...
. Carlson Cits market value $5,500,000. The Et contributes $12-3 Accounting for partner contributions Kur and Warforming a partnership to develop a theme park near Cars onda kurr contribus cash of 300,000 and land with a current market of $10, When urrundused the land in 2015, its cost was 35,500 partnership will assume Kurth 500 note payable on the land Wyatt com Cash of SSD and again st a current market value of $5,500,000 Requirements 1. Journaline the partnerships receipt...
1. Jim Steele and John Rich operate separate auto repair shops as proprietorships. On January 1, 2019, they decide to combine their separate businesses to form Steele Rich Auto Repair, a partnership. Information from their separate balance sheets is presented below: Steele Auto Repair Rich Auto Repair Cash................................................................................ $ 5,000 $10,000 Accounts receivable......................................................... 8,000 5,000 Allowance for doubtful accounts...................................... 1,000 500 Accounts payable............................................................. 3,000 6,000 Notes payable.................................................................. — 5,000 Salaries payable............................................................... 1,000 500 Equipment...................................................................... 12,000 26,000 Accumulated depreciation—equipment........................... 2,000 4,000 It is agreed that the expected realizable value of Steele's accounts receivable is $5,000 and Rich's receivables...
1. The limited liability company may elect to be manager-managed rather than member-managed, which means that only authorized members may legally bind the corporation. a. True b. False 2. A corporation is a separate entity for accounting purposes but not for legal purposes. a. True b. False — 3. When compared to a corporation, one of the major disadvantages of the partnership is its limited life. a. True b. False _ 4. Each partner may withdraw the assets he or...
Part II. True or False (2 10) Directions: Please write T or F in the blanks. 1. In a limited partnership, partners are classified as general or limited Limited partners manage the business and have unlimited personal liability for its debts. long-run survival of the corporation. assets must be shown in the balance sheet at their current market value 2. Maximizing or at least maintaining- market value is necessary for the 3. Items in the balance sheet are valued according...
If annual major repairs made in the first quarter and paid for in the second quarter clearly benefit the entire year, when should they be expensed? An allocated portion in each of the last three quarters 1. a. An allocated portion in each quarter of the year In full in the first quarter In full in the second quarter b. c. d. During the second quarter of 2011, Dodge Company sold a 2. piece of equipment at a gain of...