123. Benson and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000
and $30,000 respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing
$20,000. What is Orton’s capital balance after admitting Ramsey?
124. Singer and McMann are partners in a business. Singer’s original capital was $40,000 and McMann’s was
$60,000. They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest
on original capital. If they agree to share remaining profits and losses on a 3:2 ratio, what will Singer’s share of
the income be if the income for the year was $50,000?
125. Singer and McMann are partners in a business. Singer’s original capital was $40,000 and McMann’s was
$60,000. They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest
on original capital. If they agree to share remaining profits and losses on a 3:2 ratio, what will McMann‘s share
of the income be if the income for the year was $30,000?
126. Singer and McMann are partners in a business. Singer’s original capital was $40,000 and McMann’s was
$60,000. They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest
on original capital. If they agree to share remaining profits and losses on a 3:2 ratio, what will Singer’s share of
the income (loss) be if the net loss for the year was $10,000?
127. Singer and McMann are partners in a business. Singer’s original capital was $40,000 and McMann’s was
$60,000. They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest
on original capital. If they agree to share remaining profits and losses on a 3:2 ratio, what will Singer’s share of
the income be if the income for the year was $15,000?
128. Singer and McMann are partners in a business. Singer’s original capital was $40,000 and McMann’s was
$60,000. They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest
on original capital. If they agree to share remaining profits and losses on a 3:2 ratio, what will McMann’s share
of the income be if the income for the year was $15,000?
129. Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and
$70,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities
are paid, there is a cash balance of $50,000. What amount of loss on realization should be allocated to Alpha?
130. Teri, Doug, and Brian are partners with capital balances of $20,000, $30,000, and $50,000
respectively. They share income in the ratio of 3:2:1. Income Summary with a debit balance of $30,000 is
closed to the capital accounts. Doug withdraws from the partnership. How much cash does he get upon
withdrawal?
131. A partnership liquidation occurs when
132. The balance sheet of Morgan and Rockwell was as follows immediately prior to the partnership’s being
liquidated: cash, $20,000; other assets, $160,000; liabilities, $40,000; Morgan capital, $60,000; Rockwell
capital, $80,000. The other assets were sold for $139,000. Morgan and Rockwell share profits and losses in a
2:1 ratio. As a final cash distribution from the liquidation, Morgan will receive cash totaling
133. Harriet, Mickey, and Zack decide to liquidate their partnership. All assets are sold and the liabilities are
paid. Following these transactions, the capital balances and profit and loss percentages are as follows: Harriet,
$27,000 and 30%; Mickey, $(12,000) and 40%; Zack, $43,000 and 30%. Mickey is unable to contribute any
assets to reduce the deficit. How much cash will Harriet receive as a results of the partnership liquidation?
134. The remaining cash of a partnership (after creditors have been paid) upon liquidation is divided among
partners according to their
135. A gain or loss on realization is divided among partners according to their
136. Adriana and Belen are partners who share income in the ratio of 3:2 and have capital balances of $50,000
and $90,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all
liabilities are paid, there is a cash balance of $90,000. How much cash should be distributed to Adriana?
137. Everett, Miguel, and Ramona are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Everett,
$50,000 Cr.; Miguel, $40,000 Dr.; and Ramona, $30,000 Cr. How much cash is available for distribution to the
partners?
138. Everett, Miguel, and Ramona are partners, sharing income 1:2:3. After selling all of the assets for cash,
dividing losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Everett,
$50,000 Cr.; Miguel, $40,000 Dr.; and Ramona, $30,000 Cr. How much cash should be distributed to Everett
assuming that Miguel pays the deficiency?
139. Antonio and Barbara are partners who share income in the ratio of 1:2 and have capital balances of
$40,000 and $70,000 at the time they decide to terminate the partnership. After all noncash assets are sold and
all liabilities are paid, there is a cash balance of $80,000. What amount of loss on realization should be
allocated to Barbara?
140. Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of
$100,000 and $140,000 at the time they decide to terminate the partnership. After all noncash assets are sold
and all liabilities are paid, there is a cash balance of $130,000. What amount of loss on realization should be
allocated to Soledad?
141. Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of
$100,000 and $140,000 at the time they decide to terminate the partnership. After all noncash assets are sold
and all liabilities are paid, there is a cash balance of $130,000. What amount of loss on realization should be
allocated to Winston?
142. Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash
equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for
$80,000, the Macki’s capital account will
143. Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash
equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for
$50,000, and each partner is personally insolvent, Partner Macki will eventually receive cash of
144. Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash
equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for
$60,000, and both partners agree to make up an capital deficits with personal cash contributions, Partner Macki
will eventually receive cash of
145. The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on
January 1, 2014, the beginning of the current fiscal year. On April 10, Harrison invested an additional $20,000.
During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year
was $264,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2014 would show what amount in the capital
account for Marti on December 31, 2014?
146. The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on
January 1, 2014, the beginning of the current fiscal year. On April 10, Harrison invested an additional $20,000.
During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year
was $264,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2014 would show what amount in the capital
account for Harrison on December 31, 2014?
147. The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on
January 1, 2014, the beginning of the current fiscal year. On April 10, Harrison invested an additional $20,000.
During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year
was $264,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what amount as total capital
for the partnership on December 31, 2010?
148. The capital accounts of Hawk and Martin have balances of $160,000 and $140,000, respectively, on
January 1, 2010, the beginning of the current fiscal year. On April 10, Hawk invested an additional $10,000.
During the year, Hawk and Martin withdrew $86,000 and $68,000, respectively, and net income for the year
was $258,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what amount in the capital
account for Martin on December 31, 2010?
149. The capital accounts of Hawk and Martin have balances of $160,000 and $140,000, respectively, on
January 1, 2010, the beginning of the current fiscal year. On April 10, Hawk invested an additional $10,000.
During the year, Hawk and Martin withdrew $86,000 and $68,000, respectively, and net income for the year
was $258,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what amount in the capital
account for Hawk on December 31, 2010?
150. The capital accounts of Hawk and Martin have balances of $160,000 and $140,000, respectively, on
January 1, 2010, the beginning of the current fiscal year. On April 10, Hawk invested an additional $10,000.
During the year, Hawk and Martin withdrew $86,000 and $68,000, respectively, and net income for the year
was $258,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners’ equity for 2010 would show what amount as total capital
for the partnership on December 31, 2010?
151. Immediately prior to the admission of Allen, the Sanson-Jeremy Partnership assets had been adjusted to
current market prices, and the capital balances of Sanson and Jeremy were $80,000 and $120,000
respectively. If the parties agree that the business is worth $240,000, what is the amount of bonus that should
be recognized in the accounts at the admission of Allen?
152. The Craig-Doran Partnership owns inventory that was purchased for $85,000, has a current replacement
cost of $54,500, and is priced to sell for $98,000. At what amount should the inventory be recorded in the
accounts of the new partnership if Alexis is to be admitted?
153. Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances are $90,000 and
$130,000 respectively. Income Summary has a credit balance of $50,000. What is Roger’s capital balance
after closing Income Summary to Capital?
154. Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances are $90,000 and
$130,000 respectively. Income Summary has a credit balance of $50,000. What is Paul’s capital balance after
closing Income Summary to Capital?
155. Jackson and Campbell have capital balances of $100,000 and $300,000 respectively. Jackson devotes full
time and Campbell one-half time to the business. Determine the division of $150,000 of net income when there
is no reference to division in partership agreement.
156. Jackson and Campbell have capital balances of $100,000 and $300,000 respectively. Jackson devotes full
time and Campbell one-half time to the business. Determine the division of $150,000 of net income in ratio of
capital balances.
157. Jackson and Campbell have capital balances of $100,000 and $300,000 respectively. Jackson devotes full
time and Campbell one-half time to the business. Determine the division of $150,000 of net income in ratio of
time devoted to business.
158. Aaron and Kim form a partnership by combining the assets of their separate businesses. Aaron contributes
accounts receivable with a face amount of $50,000 and equipment with a cost of $180,000 and accumulated
depreciation of $100,000. The partners agree that the equipment is to be priced at $68,000, that $3,500 of the
accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,000 is a
reasonable allowance for the uncollectibility of the remaining accounts receivable. Kim contributes cash of
$21,000 and merchandise inventory of $44,500. The partners agree that the merchandise inventory is to be
priced at $48,000. Journalize the entries to record in the partnership accounts (a) Aaron’s investment and (b)
Kim’s investment.
159. Barton and Fallows form a partnership by combining the assets of their separate businesses. Barton
contributes accounts receivable with a face amount of $50,000 and equipment with a cost of $190,000 and
accumulated depreciation of $100,000. The partners agree that the equipment is to be priced at $85,000, that
$3,500 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and
that $1,500 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Fallows
contributes cash of $28,500 and merchandise inventory of $55,500. The partners agree that the merchandise
inventory is to be priced at $60,000. Journalize the entries to record in the partnership accounts (a) Barton’s
investment and (b) Fallows’ investment.
160. Trevor Smith contributed equipment, inventory, and $54,000 cash to a partnership. The equipment had a
book value of $30,000 and a market value of $36,000. The inventory had a book value of $60,000, but only
had a market value of $20,000, due to obsolescence. The partnership also assumed a $17,000 note payable
owed by Smith that was used originally to purchase the equipment.
Provide the journal entry for Smith’s contribution to the partnership.
161. Emerson and Dakota formed a partnership dividing income as follows:
1. Annual salary allowance to Emerson of $48,000
2. Interest of 8% on each partner’s capital balance on January 1
3. Any remaining net income divided equally.
Emerson and Dakota had $25,000 and $140,000 respectively in their January 1 capital balances. Net income
for the year was $220,000.
How much net income should be distributed to Emerson?
162. Emerson and Dakota formed a partnership dividing income as follows:
1. Annual salary allowance to Emerson of $58,000
2. Interest of 8% on each partner’s capital balance on January 1
3. Any remaining net income divided equally.
Emerson and Dakota had $25,000 and $140,000 respectively in their January 1 capital balances. New income
for the year was $220,000.
How much net income should be distributed to Dakota?
163. Gavin invested $45,000 in the Jason and Kelly partnership for ownership equity of $45,000. Prior to the
investment land was revalued to a market value of $320,000 from a book value of $200,000. Jason and Kelly
share net income in a 1:2 ratio.
a. Provide the journal entry for the revaluation of land.
b. Provide the journal entry to admit Gavin.
164. Malcolm has a capital balance of $90,000 after adjusting to fair market value. Celeste contributes $45,000
to receive a 25% interest in a new partnership with Malcolm.
Determine the amount and recipient of the partner bonus.
165. Prior to liquidating their partnership, Craig and Jenny had capital accounts of $70,000 and $110,000,
respectively. The partnership assets were sold for $285,000. The partnership had $25,000 of liabilities. Craig
and Jenny share income and losses equally. Determine the amount received by Jenny as a final distribution
from liquidation of the partnership.
166. The capital accounts of Hogan and Moss have balances of $90,000 and $65,000, respectively on January 1,
2011, the beginning of the current fiscal year. On April 10, Hogan invested an additional $8,000. During the
year, Hogan and Moss withdrew $40,000 and $32,000, respectively, and net income for the year was
$98,000. The articles of partnership make no reference to the division of net income.
Required:
(1)
Journalize the entries to:
a.
Close the income summary account.
b.
Close the drawing accounts.
(2)
Prepare a statement of partners’ equity for 2011 for the
partnership of Hogan and Moss.
(a)
Income Summary
98,000
Hogan, Capital
49,000
Moss, Capital
49,000
(b)
Hogan, Capital
40,000
Moss, Capital
32,000
Hogan, Drawing
40,000
Moss, Drawing
32,000
Hogan and Moss
Statement of Partners’ Equity
For the Year Ended December 31, 2011
Hogan
Moss
Total
Capital, January 1, 2011
$90,000
$65,000
$ 155,000
Additional investment during the year
8,000
8,000
$98,000
$65,000
$ 163,000
Net income for the year
49,000
49,000
98,000
$147,000
$114,000
$261,000
Withdrawals during the year
40,000
32,000
__72,000
Capital, December 31, 2011
$107,000
$82,000
$189,000
167. Hamir, Darci, and Pete are partners sharing income 3:2:1, respectively. After the firm’s loss from
liquidation is distributed, the capital account balances were: Hamir, $45,000 Dr.; Darci, $90,000 Cr., and Pete,
$64,000 Cr. If Hamir is personally bankrupt and unable to pay any of the $45,000, what will be the amount of
cash received by Darci and Pete upon liquidation? Show your work.
168. S. Stephens and J. Perez are partners in Space Designs. Stephens and Perez share income equally. D.
Fredricks will be admitted to the partnership. Prior to the admission, equipment was revalued downward by
$8,000. The capital balances of each partner are $100,000 and $139,000, respectively, prior to the revaluation.
Required:
(1)
Provide the journal entry for the asset
revaluation.
(2)
Provide the journal entry for
Fredricks’ admission under the following
independent situations:
a.
Fredricks purchased a 20% interest for $50,000.
b.
Fredricks purchased a 30% interest for $125,000.
(1).
S. Stephens, Capital
4,000
J. Perez, Capital
4,000
Equipment
8,000
(2).
(a)
Cash
50,000
S. Stephens, Capital
3,100
J. Perez, Capital
3,100
D. Fredricks,
Capital
56,200
Supporting calculations for the bonus:
Equity of S. Stephens
$ 96,000
Equity of J. Perez
135,000
Contribution by D. Fredricks
50,000
Total equity after admitting D. Fredricks
$ 281,000
D. Fredricks’ equity interest after admission
´ 20%
D. Fredricks’ equity after admission
$ 56,200
Contribution by D. Fredricks’
50,000
Bonus paid to D. Fredricks’
$ 6,200
(b)
Cash
125,000
S. Stephens, Capital
9,100
J. Perez, Capital
9,100
D. Fredricks, Capital
106,800
Contribution by D. Fredricks
125,000
169. After the tangible assets have been adjusted to current market prices, the capital accounts of Harper and
Kahlil have balances of $60,000 and $90,000, respectively. Fay is to be admitted to the partnership,
contributing $45,000 cash, for which she is to receive an ownership equity of $60,000. All partners share
equally in income.
Required:
(1) Journalize the entry to record the admission of Fay, who is to receive a bonus of $15,000.
(2) What are the capital balances of each partner after the admission of the new partner?
170. The partnership of Abraham Associates began operations on January 1, 2010, with contributions from two
partners as follows:
Waverley
$35,000
Marquez
40,000
The following additional partner transactions took place during the year:
(1)
In early January, Houston is admitted to the partnership by contributing $25,000 cash for a 25% interest.
(2)
Net income of $160,000 was earned in 2010. In addition, Waverley received a salary allowance of $30,000 for the year. The
three partners agree to an income-sharing ratio equal to their capital balances after admitting Houston.
(3)
The partners’ withdrawals are equal to half of their respective distributions of income after salary (i.e., half their respective
portions of the $130,000).
Required:
Prepare a statement of partnership equity for the year ended December 31, 2010.
Partnership capital, January 1, 2010
$40,000
$75,000
Admission of Houston
25,000
Salary allowance
30,000
30,000
Remaining income
45,500
52,000
32,500
130,000
Less: Partner withdrawals
(22,750)
(26,000)
(16,250)
(65,000)
Partnership capital, December 31,
Equity of initial partners prior to admission
$ 75,000
Contribution by Houston
__25,000
Total
$100,000
´ 25%
$ 25,000
Contribution by Houston
__25,000
No bonus