Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 12 - Accounting for Partnerships
Problem 12-3B (30 minutes)
Part 1
Income (Loss)
Sharing Plan Calculations Cook Xi Schwartz Total
(a) $240,000/3....................................................$80,000 $ 80,000 $ 80,000 $240 ,000
(c) Net income.................................................. $240,000
Salary allowances.......................................$40,000 $ 30,000 $ 80,000 (150 ,000)
Balance of income...................................... 90,000
Interest allowances
12-681
Chapter 12 - Accounting for Partnerships
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
Salary allowances..................................40,000 30,000 80,000
* [$87,600 – ($40,000 + $30,000 + $80,000) – ($17,280 + $25,920 + $14,400)] /3
Part 3
Dec. 31 Income Summary.....................................................87,600
Cook, Capital...................................................... 17,280
12-682
Chapter 12 - Accounting for Partnerships
Problem 12-4B (50 minutes)
Part 1
a)
Apr. 30 Gibbs, Capital...........................................................606,000
Brady, Capital..................................................... 606,000
To record admission of Brady.
d)
Apr. 30 Gibbs, Capital...........................................................606,000
Cook, Capital*...................................................... 51,200
Chan, Capital**.................................................... 204,800
Cash..................................................................... 350,000
To record Gibbs’s withdrawal and the
bonus to old partners.
* ($606,000 - $350,000) x 1/5
**($606,000- $350,000) x 4/5
e)
12-683
Chapter 12 - Accounting for Partnerships
Problem 12-4B (Concluded)
Part 2
a)
Apr. 30 Cash...........................................................................300,000
Chip, Capital*...................................................... 300,000
To record admission of Chip.
* Supporting calculations
$606,000 + $148,000 + $446,000 = $1,200,000
($1,200,000 + $300,000) x 20% = $300,000
Thus, no bonus is received or granted.
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
12-684
Chapter 12 - Accounting for Partnerships
Problem 12-5B (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
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
Ramirez, Capital ($87,200 x 1/5)..............................17,440
Toney, Capital ($87,200 x 2/5)..................................34,880
Loss on Sale of Equipment................................ 87,200
12-685
Chapter 12 - Accounting for Partnerships
Problem 12-5B (Concluded)
3.
(a) Cash...........................................................................200,000
Loss on Sale of Equipment.....................................417,200
Equipment........................................................... 617,200
Cash..................................................................... 342,600
(d) Lasure, Capital ($300,400 - $166,880).....................133,520
Ramirez, Capital ($195,800 - $83,440).....................112,360
Cash*................................................................... 245,880
* $348,600 + $200,000 + $39,880 - $342,600
4.
(a) Cash...........................................................................150,000
Loss on Sale of Equipment.....................................467,200
Equipment........................................................... 617,200
(d) Lasure, Capital*........................................................73,600
Ramirez, Capital**.....................................................82,400
Cash***................................................................ 156,000
*$300,400 - $186,880 - $39,920
**$195,800 - $93,440 - $19,960
***$348,600 + $150,000 - $342,600
12-686
Chapter 12 - Accounting for Partnerships
Serial Problem — SP 12
1. The owner should consider several factors:
a. If the company continues to earn profits, at a 1:1 ownership, she will
have to share profits equally with her new partner. On the other hand,
at a 4:1 ownership, she will only have to share one-fifth of the profits
c. If the partner invests in the business equal to their partnership
interest, there will be more total equity in the business if the partner
invests at the 1:1 level.
2a.
Jan. 1 Cash........................................................................... 80,360
New Partner, Capital............................................ 80,360
To admit a new partner at a 1:1 ownership interest
4. Total capital before admission of partner..........................$ 80,360
Partner investment............................................................... 20,090
Total capital after admission of partner.............................$100,450
New partner’s equity percentage ($20,090 / $100,450)..... 20%
Reporting in Action — BTN 12-1
12-687
1. The founders of Apple are Steve Wozniak, Steve Jobs and Ron Wayne.
Each Apple I personal computer kit was single-handedly designed and
hand-built by Steve Wozniak. The Apple I went on sale in July 1976 and
was market-priced at $666.66 ($2,763 in 2014 dollars, adjusted for
inflation).
2. At least two differences would be immediately apparent between
Apple’s corporate income statement and a partnership income
statement.
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:
12-688
