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