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

978-0078025754 Appendix D Solution Manual Part 3

March 26, 2020
Problem D-4B (50 minutes)
Part 1
a)
Apr. 30
Gibbs, Capital ...........................................................
606,000
Brady, Capital .....................................................
606,000
To record admission of Brady.
b)
c)
d)
Apr. 30
Gibbs, Capital ...........................................................
606,000
Cook, Capital* .........................................................
51,200
e)
Apr. 30
Gibbs, Capital ...........................................................
606,000
Accum. Deprec.Manufacturing Equipment ........
336,000
Problem D-4B (Concluded)
Part 2
a)
Apr. 30
Cash ..........................................................................
300,000
Chip, Capital*......................................................
300,000
To record admission of Chip.
Cook, Capital ($100,800* x 1/10) ..........................
10,080
Chan, Capital ($100,800* x 4/10) ..........................
40,320
Chip, Capital ........................................................
325,200
To record admission of Chip and bonus
Problem D-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
(b)
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
Problem D-5B (Concluded)
3.
(a)
Cash ..........................................................................
200,000
Loss on Sale of Equipment ................................
417,200
Equipment ..........................................................
617,200
(b)
Lasure, Capital ($417,200 x 2/5) ..............................
166,880
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
Serial Problem SP D
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
2b.
Jan. 1
Cash ..........................................................................
20,090
New Partner, Capital ...........................................
20,090
To admit a new partner at a 4:1 ownership interest
($80,360 x 1/4 = $20,090).
3.
Jan. 1
Cash ..........................................................................
20,090
4.
Total capital before admission of partner .........................
$ 80,360
Partner investment ..............................................................
20,090
Reporting in Action BTN D-1
1. The founders of Apple are Steve Wozniak, Steve Jobs and Ron Wayne.
Each Apple I personal computer kit was single-handedly designed and
2. At least two differences would be immediately apparent between
Apples 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:
1. Apple was organized/founded in 1976, and Google was
3. Apple and Google stock are both listed on the NASDAQ Exchange.
Ethics Challenge BTN D-3
1. Income allocation per original agreement
Mobey
Oak
Chesterfield
Total
2. Income allocation per Chesterfield’s proposal
Mobey
Oak
Chesterfield
Total
3. 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
Communicating in Practice BTN D-4
--- 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."
II. Limited Liability Partnerships
This is identified in its name with the words "Limited Liability Partnership"
or by "LLP."
Communicating in Practice (Concluded)
Continued
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 simply "S" corporations. This distinguishes them
from other corporations, called Sub-Chapter C or simply "C" corporations.
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 abbreviation such as "LLC" or "LC."
Taking It to the Net BTN D-5
1. The account titles given in the equity section of Advanced BioEnergy,
LLC are:
Teamwork in Action BTN D-6
1.
Income (Loss)
Sharing Plan
Calculations
Baker
Warner
Rice
Total
(a)
$450,000/3 ........................................................
$150,000
$150,000
$150,000
$ 450,000
10% x $300,000 ................................
$ 30,000
10% x $500,000 ................................
$ 50,000
Total interest ..........................................
(100,000)
Balance of income ................................
350,000
2. Team members share solutions.
3. Answers will vary by team. One additional income sharing basis would
be to share income based on time worked in the partnership.
Entrepreneurial Decision BTN D-7
1. Daniel, Craig, and their future partners would be wise to construct an
agreement that includes the following:
a) names (reputations) and contributions
2. The partnership form of business organization will have several
advantages for Daniel, Craig, and their partners. Three of these
3. Several disadvantages exist with the partnership form of organization.
Three of these include: (a) The greatest disadvantage is that each
Global Decision BTN D-8
1. Byung-Chull Lee (also referred to as Lee Byung-Chull)
2. In the beginning, the company focused primarily on trade export,
selling dried Korean fish, vegetables, and fruit to Manchuria and
3. Samsung groups its affiliated companies into five areas:
Electronics

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