978-0077633059 Appendix D Solution Manual Part 4

subject Type Homework Help
subject Pages 9
subject Words 1468
subject Authors John Wild, Ken Shaw

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page-pf1
Problem D-2B (50 minutes)
1.
Dec. 31 Income Summary.....................................................270,000
Mark Albin, Capital............................................. 90,000
2.
Dec. 31 Income Summary.....................................................270,000
Mark Albin, Capital............................................. 135,000
3.
Dec. 31 Income Summary.....................................................270,000
Mark Albin, Capital............................................. 118,800
*Supporting calculations Albin Peters Ramsey Total
Net income................................................. $270,000
Salary allowances
Interest allowances
Albin (10% on $164,000).........................16,400
Peters (10% on $98,400)......................... 9,840
Ramsey (10% on $65,600)...................... 6,560
Total interest.............................................. 32,800
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Problem D-3B (30 minutes)
Part 1
Income (Loss)
Sharing Plan Calculations Cook Xi Schwartz Total
(b) $240,000 x ($144,000/$480,000).....................
$72,000
$240,000 x ($216,000/$480,000)..................... $108,000
(c) Net income.................................................. $240,000
Salary allowances.......................................$40,000 $ 30,000 $ 80,000 (150 ,000 )
12% x $216,000........................................ 25,920
12% x $120,000........................................ 14,400
Total interest............................................... (57 ,600 )
Balance of income...................................... 32,400
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Problem D-3B (Concluded)
Part 2
CXS PARTNERSHIP
Statement of Partners’ Equity
For Year Ended December 31
Cook Xi Schwart
z
Total
Beginning capital balances..................$ 0 $ 0 $ 0 $ 0
Plus
Investments by owners.........................144,000 216,000 120,000 480,000
Net income
Total net income.................................... 17,280 15,920 54,400 87,600
Total.........................................................161,280 231,920 174,400 567,600
Part 3
Dec. 31 Income Summary.....................................................87,600
Cook, Capital...................................................... 17,280
Dec. 31 Cook, Capital............................................................18,000
Xi, Capital..................................................................38,000
Schwartz, Capital......................................................24,000
page-pf4
Problem D-4B (50 minutes)
Part 1
a)
Apr. 30 Gibbs, Capital...........................................................606,000
Brady, Capital..................................................... 606,000
To record admission of Brady.
b)
Apr. 30 Gibbs, Capital...........................................................606,000
c)
Apr. 30 Gibbs, Capital...........................................................606,000
Cash..................................................................... 606,000
To record withdrawal of Gibbs with no bonus.
d)
Apr. 30 Gibbs, Capital...........................................................606,000
Cook, Capital*...................................................... 51,200
e)
Apr. 30 Gibbs, Capital...........................................................606,000
Accum. Deprec.—Manufacturing Equipment........336,000
Cook, Capital*..................................................... 40,800
Chan, Capital**.................................................... 163,200
page-pf5
Problem D-4B (Concluded)
Part 2
a)
Apr. 30 Cash...........................................................................300,000
Chip, Capital*...................................................... 300,000
To record admission of Chip.
b)
Apr. 30 Cash...........................................................................196,000
Gibbs, Capital ($83,200* x 5/10)................................ 41,600
Cook, Capital ($83,200* x 1/10).................................. 8,320
c)
Apr. 30 Cash...........................................................................426,000
Gibbs, Capital ($100,800* x 5/10).......................... 50,400
To record admission of Chip and bonus
to old partners.
* Supporting calculations
page-pf6
Problem D-5B (75 minutes)
Note: All entries in this problem are dated Jan. 18.
1.
(a) Cash...........................................................................650,000
Equipment............................................................ 617,200
Gain on Sale of Equipment................................. 32,800
(b) Gain on Sale of Equipment......................................32,800
(c) Accounts Payable....................................................342,600
Cash...................................................................... 342,600
(d) Lasure, Capital ($300,400 + $13,120)...................... 313,520
Ramirez, Capital ($195,800 + $6,560)......................202,360
2.
(a) Cash...........................................................................530,000
Loss on Sale of Equipment.....................................87,200
Equipment............................................................ 617,200
(b) Lasure, Capital ($87,200 x 2/5)................................34,880
(c) Accounts Payable....................................................342,600
Cash...................................................................... 342,600
(d) Lasure, Capital ($300,400 - $34,880).......................265,520
page-pf7
Problem D-5B (Concluded)
3.
(b) Lasure, Capital ($417,200 x 2/5)..............................166,880
Ramirez, Capital ($417,200 x 1/5)............................83,440
(c) Accounts Payable....................................................342,600
Cash..................................................................... 342,600
(d) Lasure, Capital ($300,400 - $166,880).....................133,520
4.
(a) Cash...........................................................................150,000
Loss on Sale of Equipment.....................................467,200
Equipment........................................................... 617,200
(b) Lasure, Capital ($467,200 x 2/5)..............................186,880
Lasure, Capital ($59,880 x 2/3)................................39,920
(c) Accounts Payable....................................................342,600
Cash..................................................................... 342,600
(d) Lasure, Capital*........................................................73,600
page-pf8
Serial Problem SP D
1. The owner should consider several factors:
a. If the company continues to earn profits, at a 1:1 ownership, she will
have to share profits equally with her new partner. On the other hand,
at a 4:1 ownership, she will only have to share one-fifth of the profits
current owner would absorb less of the loss.
b. At the 1:1 ownership, her partner will have more of a say in how the
less of a voice in the business.
c. If the partner invests in the business equal to their partnership
d. It would likely be easier to attract a partner if there is a lower amount
of investment required by the new partner at the 4:1 level. On the
2a.
Jan. 1 Cash........................................................................... 80,360
3.
Jan. 1 Cash........................................................................... 20,090
New Partner, Capital............................................ 20,090
To admit a new partner at a 4:1 ownership interest.
4. Total capital before admission of partner.......................... $ 80,360
Financial and Managerial Accounting, 6th Edition
718
page-pf9
Reporting in Action — BTN D-1
1. The founders of Apple are Steve Wozniak, Steve Jobs and Ron Wayne.
Each Apple I personal computer kit was single-handedly designed and
2. At least two differences would be immediately apparent between
Apple’s corporate income statement and a partnership income
statement.
(i) First, in a general partnership, income flows through to the partners
(ii) Second, a corporate income statement shows earnings per share
figures, whereas a partnership income statement would not report
3. Specifically, the balance sheet for a partnership would not have the
following accounts as reported in the Apple balance sheet reproduced
in Appendix A:
Deferred tax assets

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