Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Problem D-3A (40 minutes)
Part 1
Income (Loss)
Sharing Plan Calculations Bill Bruce Barb Total
(a) $450,000/3.....................................................................$150,000
$150,000
$150,000
$450,000
(b) $450,000 x ($67,500/$750,000)..........................................
40,500
(c) Net income................................................................... $450,000
Salary allowances........................................................$ 80,000 $ 60,000 $ 90,000 (230 ,000 )
Total interest................................................................. (75 ,000 )
Bal. of income.............................................................. 145,000
Problem D-3A (Concluded)
Part 2
BBB PARTNERSHIP
Statement of Partners' Equity
For Year Ended December 31
Bill Bruce Barb Total
Beginning capital balances..............$ 0 $ 0 $ 0 $ 0
Plus
Investments by owners..................67,500 262,500 420,000 750,000
Net income
Total net income............................. 67,550 47,850 93,600 209,000
Total....................................................135,050 310,350 513,600 959,000
Part 3
Dec. 31 Income Summary.....................................................209,000
Bill Beck, Capital................................................ 67,550
Dec. 31 Bill Beck, Capital......................................................34,000
Bruce Beck, Capital..................................................48,000
Barb Beck, Capital....................................................64,000
Problem D-4A (50 minutes)
Part 1
a)
Feb. 1 Benson, Capital........................................................138,000
b)
Feb. 1 Benson, Capital........................................................138,000
c)
Feb. 1 Benson, Capital........................................................138,000
d)
Feb. 1 Benson, Capital........................................................138,000
Meir, Capital*............................................................. 28,500
e)
Feb. 1 Benson, Capital........................................................138,000
Accumulated Depreciation—Equipment................ 23,200
Meir, Capital*....................................................... 22,950
Lau, Capital**...................................................... 38,250
Problem D-4A (Concluded)
Part 2
a)
Feb. 1 Cash...........................................................................200,000
Rhodes, Capital*................................................. 200,000
b)
Feb. 1 Cash...........................................................................145,000
Meir, Capital ($41,250* x 3/10)................................. 12,375
Benson, Capital ($41,250* x 2/10)........................... 8,250
c)
Feb. 1 Cash...........................................................................262,000
Meir, Capital ($46,500* x 3/10)........................... 13,950
Benson, Capital ($46,500* x 2/10)..................... 9,300
Lau, Capital ($46,500* x 5/10)............................ 23,250
Problem D-5A (75 minutes)
Note: All entries in this problem are dated May 31.
1.
(a) Cash...........................................................................600,000
Inventory............................................................. 537,200
Gain on Sale of Inventory.................................. 62,800
(b) Gain on Sale of Inventory........................................62,800
(c) Accounts Payable....................................................245,500
Cash..................................................................... 245,500
(d) Kendra, Capital ($93,000+ $31,400)..........................124,400
2.
(a) Cash...........................................................................500,000
Loss on Sale of Inventory........................................37,200
Inventory............................................................. 537,200
(b) Kendra, Capital ($37,200 x 3/6)................................18,600
(c) Accounts Payable....................................................245,500
Cash..................................................................... 245,500
(d) Kendra, Capital ($93,000 - $18,600)........................74,400
Problem D-5A (Concluded)
3.
(a) Cash...........................................................................320,000
Loss on Sale of Inventory........................................217,200
Inventory............................................................. 537,200
(b) Kendra, Capital ($217,200 x 3/6)..............................108,600
(c) Accounts Payable....................................................245,500
Cash..................................................................... 245,500
(d) Cogley, Capital ($212,500 - $72,400).......................140,100
Mei, Capital ($167,000 - $36,200).............................130,800
Cash*................................................................... 270,900
*(180,800 + 320,000+15,600-245,500)
4.
(a) Cash...........................................................................250,000
(b) Kendra, Capital ($287,200 x 3/6)..............................143,600
Cogley, Capital ($287,200 x 2/6).............................. 95,733
(c) Accounts Payable....................................................245,500
(d) Cogley, Capital*........................................................ 83,034
PROBLEM SET B
Problem D-1B (45 minutes)
Preliminary calculations
Plan (a) & Plan (c)
Plan (b)
Percentages based on time
Bell = 0.333/1.333 = 25%
Green = 1.000/1.333 = 75%
Plan (d)
Interest allowances
Bell = 10% x $104,000 = $10,400
Income (Loss)
Year 1
Sharing Plan
Calculations
Bell
Green
(a)
40% x $36,000 loss...................................................
$(14,400)
(b)
25% x $36,000 loss...................................................
$ (9,000)
(c)
Salary allowance......................................................
60% x ($36,000 loss + $48,000 salary)....................
_______
(d)
Salary allowance......................................................
$ 48,000
(55,000)
(55,000)
Problem D-1B (Concluded)
Income (Loss) Year 2
Sharing Plan Calculations Bell Green
(a) 40% x $76,000 income..............................................$30,400
60% x $76,000 income.............................................. $45,600
(d) Salary allowance...................................................... $48,000
Interest allowances..................................................$10,400 15,600
50% x ($76,000 income - $48,000 salary
Income (Loss) Year 3
Sharing Plan Calculations Bell Green
(a) 40% x $188,000 income............................................$75,200
60% x $188,000 income............................................ $112,800
(c) Salary allowance...................................................... $ 48,000
40% x ($188,000 income - $48,000 salary).................
$56,000
(d) Salary allowance...................................................... $ 48,000
Interest allowances..................................................$10,400 15,600
