Accounting Chapter 14 5 86 January 2011 Lamb And Mona Llp

79. The ABCD Partnership has the following balance sheet at January 1, 2010,

prior to the admission of new partner, Eden.

Eden contributed $124,000 in cash to the business to receive a 20% interest in

the partnership. Goodwill was to be recorded. The four original partners shared

all profits and losses equally. After Eden made his investment, what were the

individual capital balances?

80. The ABCD Partnership has the following balance sheet at January 1, 2010,

prior to the admission of new partner, Eden.

Eden acquired a 20% interest in the partnership by contributing a total of $71,500

directly to the other four partners. No goodwill is to be recorded. Profits and

losses have previously been split according to the following percentages: Adams,

15%, Barnes, 35%, Cordas, 30%, and Davis, 20%. After Eden made his

investment, what were the individual capital balances?

81. The ABCD Partnership has the following balance sheet at January 1, 2010,

prior to the admission of new partner, Eden.

Eden acquired a 20% interest in the partnership by contributing a total of $71,500

directly to the other four partners. Goodwill is to be recorded. Profits and losses

have previously been split according to the following percentages: Adams, 15%;

Barnes, 35%; Cordas, 30%; and Davis, 20%. After Eden made his investment,

what were the individual capital balances?

82. Assume the partnership of Dean, Hardin, and Roth has been in existence

for a number of years. Dean decides to withdraw from the partnership when the

partners’ capital balances are as follows:

An appraisal of the business and its property estimates the fair value to be

$100,000. Dean has agreed to receive $64,000 in exchange for his partnership

interest.

83. Assume the partnership of Dean, Hardin, and Roth has been in existence

for a number of years. Dean decides to withdraw from the partnership when the

partners’ capital balances are as follows:

An appraisal of the business and its property estimates the fair value to be

$100,000. Dean has agreed to receive $64,000 in exchange for his partnership

interest.

What are the remaining partners’ capital balances after Dean’s interest is

dissolved, assuming the bonus method is applied?

84. Assume the partnership of Howell, Madrid, and Waldrop has been in

existence for a number of years. Howell decides to withdraw from the

partnership when the partners’ capital balances are as follows:

An appraisal of the business and its net assets estimates the fair value to be

$154,000. Land with a book value of $20,000 has a fair value of $35,000. Howell

has agreed to receive $84,000 in exchange for her partnership interest.

Prepare the journal entries for the dissolution of Howell’s partnership interest,

assuming the goodwill method is to be applied.

85. Assume the partnership of Howell, Madrid, and Waldrop has been in

existence for a number of years. Howell decides to withdraw from the

partnership when the partners’ capital balances are as follows:

An appraisal of the business and its net assets estimates the fair value to be

$154,000. Land with a book value of $20,000 has a fair value of $35,000. Howell

has agreed to receive $84,000 in exchange for her partnership interest.

What are the remaining partners’ capital balances after Howell’s interest is

dissolved, assuming the goodwill method is applied?

86. On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest

in net assets for an investment of $50,000 cash. Prior to the admission of Noris,

Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25%

to Lamb and 75% to Mona. After the admission of Noris, the partnership contract

included the following provisions:

• Salary of $40,000 a year to Noris.

• Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%

• During the fiscal year ended December 31, 2011, the partnership had income of

$90,000 prior to recognition of salary to Noris.

Record the journal entry for the admission of Noris. Goodwill is

not

to be

recorded.

87. On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest

in net assets for an investment of $50,000 cash. Prior to the admission of Noris,

Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25%

to Lamb and 75% to Mona. After the admission of Noris, the partnership contract

included the following provisions:

88. On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest

in net assets for an investment of $50,000 cash. Prior to the admission of Noris,

Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25%

to Lamb and 75% to Mona. After the admission of Noris, the partnership contract

included the following provisions:

• Salary of $40,000 a year to Noris.

• Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%

• During the fiscal year ended December 31, 2011, the partnership had income of

$90,000 prior to recognition of salary to Noris.

Record the journal entry to record the remainder of net income to the capital

accounts.

89. James, Keller, and Rivers have the following capital balances; $48,000,

$70,000 and $90,000 respectively. Because of a cash shortage James invests an

additional $12,000 on June 1st. Each partner withdraws $1,000 per month. James,

Keller, and Rivers receive a salary of $13,000, $15,000 and $20,000, respectively,

for work done during the year. Each partner receives interest of 8% on their

weighted average capital balance without regard to normal drawings. Any

remaining profits are split 20%, 30%, and 50% respectively. The net income for

the year is $30,000. What are the ending capital balances for each partner?

Remaining income (loss):