1 12,000
8,000
12 ÷20=
Bob Kim Distributed
$5,000
Total income for distribution
Distribution of interest
Appendix A, SE 3.
Income of Partner Income
Appendix A, SE 1.
Jan.
Office Equipment
Cash
Appendix A, SE 2.
Computation of capital ratios:
60%$12,000
Bob
APPENDIX A—Solutions
ACCOUNTING FOR UNINCORPORATED BUSINESSES
715
Bob Kim Distributed
$5,000
6,000 ( 6,000)
($3,000)
( 1,500)
( 1,500)
Appendix A, SE 4.
Income of Partner Income
for Sonia because Sonia is buying Kim’s interest directly from Kim and not from the
partnership.
The Capital account balances would remain the same at $15,000 for Bob and $10,000
Bob
Total income for distribution
Negative balance after interest and salary
Equal distribution of negative balance
Bob
Kim
Appendix A, SE 5.
716
$25,000
$11,000
6,000 $ 5,000
( × 1 / 2 $ 2,500
(×1/2 2,500 $ 5,000
Distribution of bonus to original partners
Kim
Bob $5,000
$5,000
)
Investment by Sonia
Less equity assigned to Sonia
)
Appendix A, SE 6.
Partners’ equity in the original partnership
717
$25,000
5,000
( × 1 / 2 $1,250
(×1/2 1,250 $ 2,500
– = $13,750
Appendix A, SE 7.
Partners’ equity in the original partnership
$1,250
Distribution of bonus from original partners
Bob
Kim
Bob $2,500
$2,500
)
)
New Capital account balances:
Cash investment by Sonia
$15,000
718
240,000
220,000
a.
2011 2012
( $84,000 × 0.50 $42,000
b.
c.
2011 2012
Income shared on the basis of the partners’ original investments
Because the partners failed to agree on an income-sharing arrangement,
income must be shared equally. This answer is identical to a.
Share of income for each partner determined
Rivers
)
2.
Income shared equally
Building
Cash
Appendix A, P 1.
Entry prepared1.
719
d.
Income of Partner
Rivers Bascomb Distributed
$84,000
$24,000 × 0.50 ) 12,000
$24,000 × 0.50 ) 12,000 ( 24,000)
—
$36,000 $48,000 $84,000
Income of Partner
Rivers Bascomb Distributed
$40,000
2011 computation:
Income
Income
2012 computation:
Distribution of Interest
Total Income for Distribution
Rivers (
Bascomb (
Appendix A, P 1. (Continued)
Interest on investments; remainder shared equally
Total Income for Distribution
Remaining Income
Income of Partners
Income
720
e.
Rivers Bascomb Distributed
$84,000
$40,000
Rivers Bascomb Distributed
$40,000
$40,000
Appendix A, P 1. (Continued)
Income
Income
Income of Partner
Income of Partner
2011 computation:
2012 computation:
Total Income for Distribution
Distribution of Salaries
Rivers
Distribution of Salaries
Rivers
Salaries allowed; remainder shared equally
Total Income for Distribution
721
f.
Income of Partner
Rivers Bascomb Distributed
$84,000
($38,000)
$38,000 × 0.50 ) ( 19,000)
$38,000 × 0.50 ) ( 19,000) 38,000
Income of Partner
Rivers Bascomb Distributed
$40,000
$40,000
$28,000 ( 68,000)
Income
Income
2012 computation:
2011 computation:
Appendix A, P 1. (Continued)
Rivers
Bascomb
Distribution of Salaries
Total Income for Distribution
Equal Distribution of Negative Balance
Rivers (
Bascomb (
Interest
Interest and salaries allowed; remainder shared equally
Total Income for Distribution
Distribution of Salaries
722
a. 31 9,000
b. 31 20,000
c. 31 30,000
$ 90,000
30,000
$120,000
Capital of new partnership
Original partners’ capital
Vonice’s investment
Computation:
24,000
20,000
July
Margaret, Capital
Cash
Cash
Vonice, Capital
Vonice, Capital
Vonice, Capital
Appendix A, P 2.
July
partnership
July
Admission of Vonice to the
9,000
723
Ratios
d. 31
× 45 90 ) $ 9,000
× 15 90 ) 3,000
Partner
30,000
9,000
3,000
6,000
to the original partners
partnership to Vonice, bonus charged
48,000
Lou, Capital
Vonice, Capital
Sale of a 40 percent interest in the
Appendix A, P 2. (Continued)
Partners’ capital ratios:
Tracy, Capital
$18,000
Cash
Margaret, Capital
Capital
Balance
July
Margaret (
Tracy (
$18,000
*Distribution of bonus from original partners:
/
/
e. 31 45,000
2,500
*
× 15 / ) $2,500
Margaret, CapitalJuly
$7,500
45
Distribution of excess cash over Margaret’s capital balance between the
remaining partners:
Tracy, Capital
Appendix A, P 2. (Continued)
Tracy (
725
