Title: Problem 12-5B
QA_Ori:
Note: All entries in this problem are dated Jan. 18.
1.
(a) Cash 650,000
(b) Gain on Sale of Equipment 32,800
(d) Lasure, Capital ($300,400 + $13,120) 313,520
2.
(a) Cash 530,000
(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
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
Loss on Sale of Equipment 467,200
Equipment 617,200
(b) Lasure, Capital ($467,200 x 2/5) 186,880
Ramirez, Capital ($467,200 x 1/5) 93,440
(c) Accounts Payable 342,600
Cash 342,600
(d) Lasure, Capital* 73,600
Title: Serial Problem 1
QA_Ori:
Adria Lopez 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
c. If the partner invests in the business equal to their partnership interest, there will
d. It would likely be easier to attract a partner if there is a lower amount of
Title: Serial Problem 2
QA_Ori:
2a.
Jan. 1 Cash 90,148
2b.
Jan. 1 Cash 22,537
Title: Serial Problem 3
QA_Ori:
Jan. 1 Cash 22,537
Title: Serial Problem 4
QA_Ori:
Total capital before admission of partner $ 90,148
Title: Reporting in Action 1
QA_Ori:
Title: Reporting in Action 2
QA_Ori: At least two differences would be immediately apparent between Polaris’s
Title: Reporting in Action 3
QA_Ori: Specifically, the balance sheet for a partnership would not have the following
accounts as reported in the Polaris balance sheet reproduced in Appendix A:
Income taxes receivable
We would also expect a separate Capital account to be reported for each partner in the
equity section of the balance sheet.
Title: Comparative Analysis 1
QA_Ori: Arctic Cat was founded in 1961 and Polaris was founded in 1954.
Title: Comparative Analysis 2
QA_Ori: Polaris went public in 1986. Arctic Cat’s initial public offering occurred in 1990.
Title: Comparative Analysis 3
QA_Ori:
Polaris is listed under the NYSE and Arctic Cat is listed under the NASDAQ.
Title: Ethics Challenge 1
QA_Ori:
Income allocation per original agreement
Mobey Oak Chesterfield Total
Salary allowance $ 3,000 $ 3,000 $ 3,000 $ 9,000
Title: Ethics Challenge 2
QA_Ori:
Income allocation per Chesterfield’s proposal
Mobey Oak Chesterfield Total
Title: Ethics Challenge 3
QA_Ori:
The ethical concern here is that Chesterfield has proposed a change to the partnership
agreement that appears to be only self-serving. It is true that Chesterfield is the group’s
A potentially fair compromise would be to study the referral patterns of Mobey
and Oak. Through analysis, a dollar value can be assigned to the average amount of
Title: Communicating in Practice
QA_Ori:
— STUDY NOTES —
ORGANIZATIONS WITH PARTNERSHIP CHARACTERISTICS
I. Limited Partnerships
II. Limited Liability Partnerships
III. S Corporations
IV. Limited Liability Companies
I. Limited Partnerships
These organizations are identified in its name with the words “Limited Partnership,” or
“Ltd.,” or “L.P.”
A limited partnership has two classes of partners, general and limited. At least one
partner must be a general partner who assumes management duties and unlimited
partnerships.
II. Limited Liability Partnerships
This is identified in its name with the words “Limited Liability Partnership” or by “LLP.”
This type of partnership is designed to protect innocent partners from malpractice or
III. S Corporations
Certain corporations with 100 or fewer stockholders can elect to be treated like a
partnership for income tax purposes. These corporations are called Sub-Chapter S or
IV. Limited Liability Companies
A new form of business organization is the limited liability company. The names of
these businesses usually include the words “Limited Liability Company” or an
Title: Taking It to the Net 1
QA_Ori:
The account titles given in the equity section of America First Tax Exempt Investors, L.P
are:
Title: Taking It to the Net 2
QA_Ori: There are 30,122,928 units with a value of $161,389,189 at December 31,
2010.
Title: Taking It to the Net 3
QA_Ori: The largest asset held by America First is ‘Buildings and improvements’ with a
gross value (before accumulated depreciation) of $91,802,694.
Title: Teamwork in Action 1
QA_Ori:
Income
(Loss)
Sharing Plan
Calculations Baker Warner Rice Total
0
0
(b) $450,000 x
($200,000/$1,000,000)
$
90,000
90,000
0
(c) Net income $ 450,000
Salary allowances $
50,000
$
60,000
$ 70,000
(180,000)
0
0
(d) Net Income $ 450,000
Interest allowances:
10% x $200,000 $
20,000
6
7
Title: Teamwork in Action 2
QA_Ori:
Title: Teamwork in Action 3
Title: Entrepreneur Decision 1
QA_Ori: Omar, Nick, and their future partners would be wise to construct an agreement
that includes the following:
Title: Entrepreneur Decision 2
QA_Ori: The partnership form of business organization will have several advantages for
Title: Entrepreneur Decision 3
QA_Ori: Several disadvantages exist with the partnership form of organization. Three of
these include: (a) The greatest disadvantage is that each partner has unlimited liability
Title: Global Decision 1
Title: Global Decision 2
Title: Global Decision 3
QA_Ori: Alongside KTM-Sportmotorcycle AG, KTM AG encompasses KTM