Type
Solution Manual
Book Title
Financial Accounting Fundamentals 5th Edition
ISBN 13
978-0078025754

978-0078025754 Appendix D Solution Manual Part 2

March 26, 2020
PROBLEM SET A
Problem D-1A (45 minutes)
Preliminary calculations
Plan (a) & Plan (c)
Percentages based on initial investments
Watts = $42,000/$105,000 = 40%
Salary allowance ......................................................
$ 72,000
40% x ($36,000 loss + $72,000 salary) ....................
$(43,200)
60% x ($36,000 loss + $72,000 salary) ....................
________
(64,800)
Totals ................................................................
$(43,200)
$ 7,200
Problem D-1A (Concluded)
Income (Loss)
Year 2
Sharing Plan
Calculations
Watts
Lyon
40% x $90,000 income ................................
$36,000
60% x ($90,000 income - $72,000 salary) ..................
_______
10,800
Totals ................................................................
$ 7,200
$82,800
Salary allowance ......................................................
$72,000
Interest allowances ..................................................
$ 4,200
6,300
50% x ($90,000 income - $72,000
(a)
40% x $150,000 income ...........................................
$60,000
60% x $150,000 income ...........................................
$ 90,000
(b)
33 1/3% x $150,000 income ................................
$50,000
66 2/3% x $150,000 income ................................
$100,000
(c)
Salary allowance ......................................................
$ 72,000
50% x ($150,000 income - $72,000
salary - $10,500 interest) ................................
33,750
33,750
Totals ................................................................
$37,950
$112,050
Problem D-2A (50 minutes)
1.
Dec. 31
Income Summary .....................................................
249,000
Kara Ries, Capital ..............................................
83,000
2.
Dec. 31
Income Summary .....................................................
249,000
Kara Ries, Capital ..............................................
62,250
Tammy Bax, Capital ..........................................
87,150
3.
Dec. 31
Income Summary .....................................................
249,000
Kara Ries, Capital ..............................................
79,000
Tammy Bax, Capital ..........................................
72,200
Joe Thomas, Capital ..........................................
97,800
Total allocated equally .............................
15,000
Balance of income ................................
______
______
______
$ 0
Shares of the partners..............................
$79,000
$72,200
$97,800
Problem D-3A (40 minutes)
Part 1
Income (Loss)
Sharing Plan
Calculations
Bill
Bruce
Barb
Bal. of income ................................................................
145,000
Balance allocated ................................
29,000
58,000
58,000
(145,000)*
Balance of income ................................
$ 0
Shares of partners ................................
$115,750
$144,250
$190,000
Problem D-3A (Concluded)
Part 2
BBB PARTNERSHIP
Statement of Partners' Equity
For Year Ended December 31
Barb Beck, Capital ..............................................
93,600
To close Income Summary.
Dec. 31
Bill Beck, Capital ......................................................
34,000
Bruce Beck, Capital ..................................................
48,000
Problem D-4A (50 minutes)
Part 1
a)
Feb. 1
Benson, Capital ........................................................
138,000
North, Capital .....................................................
138,000
To record admission of North.
b)
Lau, Capital** ......................................................
38,250
Equipment ..........................................................
70,000
Cash ....................................................................
30,000
To record withdrawal of Benson with bonus to
Problem D-4A (Concluded)
Part 2
a)
Feb. 1
Cash ..........................................................................
200,000
Rhodes, Capital* ................................................
200,000
To record admission of Rhodes.
Benson, Capital ($46,500* x 2/10) .....................
9,300
Lau, Capital ($46,500* x 5/10) ............................
23,250
Rhodes, Capital ..................................................
215,500
To record admission of Rhodes and bonus to old partners.
Problem D-5A (75 minutes)
Note: All entries in this problem are dated May 31.
1.
(a)
Cash ..........................................................................
600,000
Inventory .............................................................
537,200
Gain on Sale of Inventory ................................
62,800
(b)
Gain on Sale of Inventory ................................
62,800
2.
(a)
Cash ..........................................................................
500,000
Loss on Sale of Inventory ................................
37,200
Inventory .............................................................
537,200
(b)
Kendra, Capital ($37,200 x 3/6) ...............................
18,600
Problem D-5A (Concluded)
3.
(a)
Cash ..........................................................................
320,000
Loss on Sale of Inventory .......................................
217,200
Inventory .............................................................
537,200
(b)
Kendra, Capital ($217,200 x 3/6) .............................
108,600
4.
(a)
Cash ..........................................................................
250,000
Loss on Sale of Inventory .......................................
287,200
Inventory .............................................................
537,200
(b)
Kendra, Capital ($287,200 x 3/6) .............................
143,600
PROBLEM SET B
Problem D-1B (45 minutes)
Preliminary calculations
Plan (a) & Plan (c)
Percentages based on initial investments
Bell = $104,000/$260,000 = 40%
40% x ($36,000 loss + $48,000 salary) ....................
$(33,600)
60% x ($36,000 loss + $48,000 salary) ....................
_______
(50,400)
Totals ................................................................
$(33,600)
$ (2,400)
(d)
Salary allowance ......................................................
$ 48,000
Problem D-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
Totals ................................................................
$11,200
$64,800
(d)
Salary allowance ......................................................
$48,000
Interest allowances ..................................................
$10,400
15,600
50% x ($76,000 income - $48,000 salary
- $26,000 interest) ................................
1,000
1,000
60% x $188,000 income ................................
$112,800
(b)
25% x $188,000 income ................................
$47,000
75% x $188,000 income ................................
$141,000
(c)
Salary allowance ......................................................
$ 48,000
40% x ($188,000 income - $48,000 salary) ................
$56,000
- $26,000 interest) ................................
57,000
57,000
Totals ................................................................
$67,400
$120,600
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
Roland Peters, Capital ......................................
81,000
3.
Dec. 31
Income Summary .....................................................
270,000
Mark Albin, Capital ............................................
118,800
Roland Peters, Capital ......................................
88,240
Sam Ramsey, Capital ........................................
62,960
Problem D-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
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
Plus
Investments by owners .......................
144,000
216,000
120,000
Net income
Part 3
Dec. 31
Income Summary .....................................................
87,600
Cook, Capital ......................................................
17,280

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