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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
