PROBLEM SET B
Problem 12-1B (45 minutes)
Preliminary calculations
Plan (a) & Plan (c)
Percentages based on initial investments
Plan (b)
Percentages based on time
Plan (c) & Plan (d)
Salary allowance
Plan (d)
Interest allowances
Income (Loss)
Year 1
Sharing Plan
Calculations
Bell
Green
(a)
(b)
(c)
Salary allowance……………………………………………..
Totals……………………………………………………………..
(d)
Salary allowance……………………………………………..
Interest allowances………………………………………….
Totals……………………………………………………………..
Problem 12-1B (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
Income (Loss) Year 3
Sharing Plan Calculations Bell Green
(a) 40% x $188,000 income……………………………………$75,200
60% x $188,000 income…………………………………… $112,800
(b) 25% x $188,000 income……………………………………$47,000
75% x $188,000 income…………………………………… $141,000
Problem 12-2B (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…………………………………………… $270,000
Salary allowances
Albin………………………………………………….$ 96,000
Peters……………………………………………….. $72,000
Problem 12-3B (30 minutes)
Part 1
Income (Loss)
Sharing Plan Calculations Cook Xi Schwartz Total
(b) $240,000 x ($144,000/$480,000)………………..
$72,000
(c) Net income………………………………………….. $240,000
Salary allowances…………………………………$40,000 $ 30,000 $ 80,000 (150 ,000)
Balance of income……………………………….. 90,000
Interest allowances
Problem 12-3B (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
Part 3
Dec. 31 Income Summary…………………………………………….87,600
Cook, Capital…………………………………………….. 17,280
Dec. 31 Cook, Capital…………………………………………………..18,000
Xi, Capital……………………………………………………….38,000
Problem 12-4B (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
Cannon, Capital………………………………………….. 606,000
To record admission of Cannon.
c)
e)
Apr. 30 Gibbs, Capital………………………………………………….606,000
Accum. Deprec.—Manufacturing Equipment……..336,000
Problem 12-4B (Concluded)
Part 2
a)
Apr. 30 Cash……………………………………………………………….300,000
Chip, Capital*…………………………………………….. 300,000
To record admission of Chip.
* Supporting calculations
b)
Apr. 30 Cash……………………………………………………………….196,000
Gibbs, Capital ($83,200* x 5/10)………………………….. 41,600
c)
Apr. 30 Cash……………………………………………………………….426,000
Gibbs, Capital ($100,800* x 5/10)……………………. 50,400
Cook, Capital ($100,800* x 1/10)…………………….. 10,080
Problem 12-5B (75 minutes)
Note: All entries in this problem are dated Jan. 18.
1.
(a) Cash……………………………………………………………….650,000
(b) Gain on Sale of Equipment……………………………….32,800
(c) Accounts Payable……………………………………………342,600
(d) Lasure, Capital ($300,400 + $13,120)………………… 313,520
2.
(a) Cash……………………………………………………………….530,000
(b) Lasure, Capital ($87,200 x 2/5)………………………….34,880
(d) Lasure, Capital ($300,400 – $34,880)………………….265,520
Problem 12-5B (Concluded)
3.
(a) Cash……………………………………………………………….200,000
(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
(b) Lasure, Capital ($467,200 x 2/5)………………………..186,880
(c) Accounts Payable……………………………………………342,600
Cash…………………………………………………………. 342,600
(d) Lasure, Capital*……………………………………………….73,600
Serial Problem — SP 12
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,
b. At the 1:1 ownership, her partner will have more of a say in how the
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
2a.
Jan. 1 Cash………………………………………………………………. 80,360
2b.
Jan. 1 Cash………………………………………………………………. 20,090
3.
Jan. 1 Cash………………………………………………………………. 20,090
4. Total capital before admission of partner……………………. $ 80,360