Accounting Chapter 12 Homework Noncash Cash Balances Before Realization Sale Assets

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–6A (Concluded)

1. b.

Noncash Sails Welch Greenberg

Cash Assets Liabilities (2/5) (2/5) (1/5)

Balances before realization $32,000 $128,000 $20,000 $58,000 $72,000 $10,000

Sale of assets and division of loss +55,000 –128,000 —–29,200 –29,200 –14,600

2. a. Sails, Capital

b. Sails, Capital*

=+++

2,300

+

SAILS, WELCH, AND GREENBERG

Statement of Partnership Liquidation

Capital

26,500

For Period November 1–30, 2014

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–1B

1. Apr. 1 Cash 18,000

Merchandise Inventory 50,000

Whitney Lang, Capital 68,000

2.

Current assets:

Cash $ 44,200

Accounts receivable $43,400

Less allowance for doubtful accounts 3,500 39,900

Assets

LANG AND CAPRI

Balance Sheet

April 1, 2013

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–1B (Concluded)

3. 31 Income Summary

Whitney Lang, Capital*

Mar.

118,000

63,400

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–2B

Plan Howell Nickles Howell Nickles

a. ………………………………………

…

$210,000 $210,000 $ 75,000 $75,000

Details:

a. Net income (1:1)…………………

…

$210,000 $210,000 $ 75,000 $75,000

…

Nickles Howell NicklesHowell

(1) (2)

$420,000 $150,000

…

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–3B

1.

Professional fees

Operating expenses:

Salary expense

Total

Division of net income:

2.

Total

Capital, January 1, 2014

RAMIREZ AND XUE

Income Statement

For the Year Ended December 31, 2014

$555,300

$384,900

Camila

Ramirez Xue

Ping

Statement of Partnership Equity

For the Year Ended December 31, 2014

Xue

$135,000 $260,000

Ping

$125,000

Camila

Ramirez

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–3B (Concluded)

3.

Current assets:

Cash $ 70,300

Accounts receivable 33,600

RAMIREZ AND XUE

Balance Sheet

December 31, 2014

Assets

12-41

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–4B

1. Aug. 31 Asset Revaluations 1,800

Accounts Receivable 1,500

2. Sept. 1 Adriana Estrada, Capital 26,000

12-42

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–4B (Concluded)

3.

Current assets:

Cash1$44,300

Accounts receivable $18,000

CALDWELL, ESTRADA, AND MAYS

Balance Sheet

September 1, 2014

Assets

12-43

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–5B

1.

Noncash Fairchild Lowes Howard

Cash Assets Liabilities (1/4) (1/4) (2/4)

Balances before realization $23,500 $84,500 $22,000 $42,000 $ 7,500 $36,500

2. a. Zach Fairchild, Capital

b. Zach Fairchild, Capital*

32,500

500

+++

FAIRCHILD, LOWES, AND HOWARD

Statement of Partnership Liquidation

For the Period April 10–30, 2014

Capital

+=

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–6B

1. a.

Noncash Chapelle Rock Pryor

Cash Assets Liabilities (1/5) (2/5) (2/5)

Balances before realization $ 65,000 $167,000 $30,000 $14,000 $102,000 $ 86,000

CHAPELLE, ROCK, AND PRYOR

Statement of Partnership Liquidation

For Period August 3–29, 2014

Capital

++=++

12-45

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

Prob. 12–6B (Concluded)

1. b.

Noncash Chapelle Rock Pryor

Cash Assets Liabilities (1/5) (2/5) (2/5)

Balances before realization $ 65,000 $167,000 $30,000 $14,000 $102,000 $86,000

2. a. Rock, Capital

b. Rock, Capital*

61,500

2,500

+= +++

CHAPELLE, ROCK, AND PRYOR

Statement of Partnership Liquidation

Capital

For Period August 3–29, 2014

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

CP 12–1

This scenario highlights one of the problems that arises in partnerships:

attempting to align contribution with income division. Often, disagreements

are based on honest differences of opinion. However, in this scenario, there is

evidence that Robbins was acting unethically. Robbins apparently made no

CP 12–2

A good solution to this problem would be to divide income in three steps:

1. Provide interest on each partner’s capital balance.

2. Provide a monthly salary for each partner.

3. Divide the remainder according to a partnership formula.

With this approach, the return on capital and effort will be separately

calculated in the income division formula before applying the percentage

CASES & PROJECTS

12-47

CP 12–3

a. Revenue per

Revenue per Professional

Partner* Staff**

Deloitte & Touche………………………………

…

$3,795,281 $324,685

** Likewise, the revenue per professional staff is determined by dividing the

total revenue by the number of professional staff, adjusting the revenues

for the fact that they are expressed in millions in the table. For example,

revenue per professional staff is determined for Deloitte & Touche as

follows:

b. The amount of revenue earned per partner can be compared across the four

firms by setting each firm’s revenue per partner as a percent of the highest

revenue per partner firm, as follows:

Percent of

Revenue per Deloitte &

Partner Touche

Deloitte & Touche………………………………

…

$3,795,281 100%

CHAPTER 12 Accounting for Partnerships and Limited Liability Companies

CP 12–3 (Concluded)

The amount of revenue earned per professional staff can be compared

across the four firms by setting each firm’s revenue per professional staff

as a percent of the highest revenue per professional staff firm, as follows:

Revenue per Percent of

Professional Ernst &

Staff Young

Deloitte & Touche………………………

…

$324,685 80%

As can be seen, Ernst & Young has the highest revenue per professional

staff of the four firms. PwC, for example, has revenue per professional

CP 12–4

When developing an LLC (or partnership), the operating (or partnership)

agreement is a critical part of establishing a business. Each party must consider

the various incentives of each individual in the LLC. For example, in this case,

*

CP 12–4 (Concluded)

A second issue is the division of partnership income. The suggested

agreement is for all the partners to share the remaining income, after the 10%

preferred return, equally. Wilson should be counseled to consider all aspects

CP 12–5

b. A transaction selling a majority interest of Chrysler from DaimlerChrysler to

c. Chrysler Group LLC went through significant changes during the recession

of 2009. The U.S. government provided bailout funds that were turned

d. Chrysler Group LLC is not a public company. Its major owners, Fiat, UAW,

U.S. and Canadian governments, and private equity funds hold their