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Problem D-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
Cook, Capital ($83,200* x 1/10) ................................
8,320
Chan, Capital ($83,200* x 4/10) ................................
33,280
Chip, Capital .......................................................
279,200
To record Chip’s admission and bonus.
* Supporting calculations
($1,200,000 + $196,000) x 20% = $279,200
$196,000 - $279,200 = $(83,200)
Thus, the new partner receives a bonus.
c)
Apr. 30
Cash ..........................................................................
426,000
Gibbs, Capital ($100,800* x 5/10) .........................
50,400
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
to old partners.
* Supporting calculations
($1,200,000 + $426,000) x 20% = $325,200
$426,000 - $325,200 = $100,800
Thus, the old partners receive a 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
Lasure, Capital ($32,800 x 2/5) ...........................
13,120
Ramirez, Capital ($32,800 x 1/5) ........................
6,560
Toney, Capital ($32,800 x 2/5) ............................
13,120
(c)
Accounts Payable ....................................................
342,600
Cash ................................................................
342,600
(d)
Lasure, Capital ($300,400 + $13,120)......................
313,520
Ramirez, Capital ($195,800 + $6,560) .....................
202,360
Toney, Capital ($127,000 + $13,120) .......................
140,120
Cash* ................................................................
656,000
* $348,600 + $650,000 - $342,600
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
(c)
Accounts Payable ....................................................
342,600
Cash ................................................................
342,600
(d)
Lasure, Capital ($300,400 - $34,880) ......................
265,520
Ramirez, Capital ($195,800 - $17,440) ....................
178,360
Toney, Capital ($127,000 - $34,880) ........................
92,120
Cash* ................................................................
536,000
* $348,600 + $530,000 - $342,600
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
Ramirez, Capital ($417,200 x 1/5) ...........................
83,440
Toney, Capital ($417,200 x 2/5) ...............................
166,880
Loss on Sale of Equipment ...............................
417,200
Cash ..........................................................................
39,880
Toney, Capital ($127,000 - $166,880) ................
39,880
(c)
Accounts Payable ....................................................
342,600
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
(b)
Lasure, Capital ($467,200 x 2/5) ..............................
186,880
Ramirez, Capital ($467,200 x 1/5) ...........................
93,440
Toney, Capital ($467,200 x 2/5) ...............................
186,880
Loss on Sale of Equipment ...............................
467,200
Lasure, Capital ($59,880 x 2/3) ................................
39,920
Ramirez, Capital ($59,880 x 1/3) .............................
19,960
Toney, Capital ($127,000 - $186,880) ................
59,880
(c)
Accounts Payable ....................................................
342,600
Cash ................................................................
342,600
(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
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
with her partner. However, if the business experiences losses, she
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
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:
Comparative Analysis — BTN D-2
1. Apple was organized/founded in 1976, and Google was
Ethics Challenge — BTN D-3
1. Income allocation per original agreement
Mobey
Oak
Chesterfield
Total
Salary allowance ..............
$ 3,000
$ 3,000
$ 3,000
$ 9,000
Per patient charges..........
4,100*
12,300**
24,600***
41,000
Totals ................................
$ 7,100
$15,300
$27,600
$50,000
*(.10 x 41,000)
**(.30 x 41,000)
***(.60 x 41,000)
2. Income allocation per Chesterfield’s proposal
Mobey
Oak
Chesterfield
Total
Per patient charges..........
$ 5,000
(.10 x 50,000)
$15,000
(.30 x 50,000)
$30,000
(.60 x 50,000)
$50,000
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
that Chesterfield is the group’s largest producer and, therefore, is
entitled to the largest income. However, Chesterfield’s proposal does
