Accounting Chapter 12 Homework Problemsset Problem 121c A Jan B Jan

subject Type Homework Help
subject Pages 13
subject Words 1680
subject Textbook Accounting Principles 12th Edition
subject Authors Donald E. Kieso, Jerry J. Weygandt, Paul D. Kimmel
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CHAPTER 12
SOLUTIONS TO EXERCISES—SET B
EXERCISE 12-1B
1. True.
2. False. Partnerships are fairly easy to form; they can be formed simply
by a verbal agreement.
3. True.
4. False. The net income of a partnership is not taxed as a separate entity.
EXERCISE 12-2B
(a) Cash ........................................................................... 60,000
Bosch, Capital ................................................... 60,000
(b) $60,000 + $100,000 + $62,000 = $222,000
EXERCISE 12-3B
Jan. 1 Cash ................................................................... 14,000
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EXERCISE 12-4B
(a)
(1)
DIVISION OF NET INCOME
E. Hartley
Total
Salary allowance ...............................
Interest allowance
E. Hartley ($40,000 X 10%).........
S. Kave ($70,000 X 10%) ............
$24,000
4,000
$39,000
(2)
DIVISION OF NET INCOME
E. Hartley
Total
Salary allowance ...............................
Interest allowance .............................
Total salaries and interest ...............
Remaining deficiency, ($8,000)
($24,000)
( 4,000)
( 28,000)
$39,000
11,000
50,000
(b) (1) Income Summary ............................................... 60,000
E. Hartley, Capital ........................................ 34,000
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EXERCISE 12-5B
(a) Income Summary ...................................................... 60,000
K. Ison, Capital
($60,000 X 55%) ............................................ 33,000
(b) Income Summary ...................................................... 60,000
K. Ison, Capital
[$30,000 + ($10,000 X 55%)] ......................... 35,500
(c) Income Summary ....................................................... 60,000
K. Ison, Capital ................................................... 33,500
I. McCoy, Capital ................................................ 26,500
(d) Ison: $50,000 + $33,500 – $15,000 = $68,500
EXERCISE 12-6B
(a) DAYLIGHT CO.
Partners’ Capital Statement
For the Year Ended December 31, 2017
K. Heese
D. Flores
Total
Capital, January 1 ....................
Add: Net income .....................
$40,000
18,000
$15,000
18,000
$55,000
36,000
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EXERCISE 12-6B (Continued)
(b) DAYLIGHT CO.
Partial Balance Sheet
December 31, 2017
Owners’ equity
K. Heese, Capital ................................................... $48,000
EXERCISE 12-7B
THE ARTFUL PARTNERSHIP
Balance Sheet
December 31, 2017
Assets
Current Assets
Cash ............................................................. $51,000
Accounts Receivable .................................. $37,000
Property, Plant and Equipment
Land.............................................................. $22,000
Buildings ...................................................... 80,000
Liabilities and Owners’ Equity
Long-term Liabilities
Mortgage Payable ........................................ $ 25,000
Owners’ Equity
Black, Capital ............................................... $70,000
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EXERCISE 12-8B
THE BICE COMPANY
Schedule of Cash Payments
Item
Cash
+
Noncash
Assets
=
Liabilities
+
Birk
Capital
+
Cey
Capital
Balances before
liquidation
Sale of noncash
$ 15,000
($110,000)
($60,000)
$40,000
$25,000
EXERCISE 12-9B
(a) Loss on Realization ................................................ 20,000
Cash ......................................................................... 90,000
Noncash Assets .............................................. 110,000
(d) Birk, Capital ............................................................. 28,000
Cey, Capital ............................................................. 17,000
Cash ............................................................. 45,000
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EXERCISE 12-10B
(a) (1) Cash .................................................................... 6,000
North, Capital .............................................. 6,000
(2) Reimer, Capital ................................................... 27,000
Laver, Capital ..................................................... 24,000
Cash ............................................................ 51,000
*EXERCISE 12-11B
(a) S. Flood, Capital ($40,000 X 50%) ............................. 20,000
H. Perry, Capital ................................................. 20,000
*EXERCISE 12-12B
(a) Cash ............................................................................ 80,000
B. Fell, Capital (7/10 X $8,000) ........................... 5,600
C. Otto, Capital (3/10 X $8,000) .......................... 2,400
D. Santo, Capital ................................................. 72,000
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*EXERCISE 12-12B (Continued)
Investment by new partner, Santo ........ $ 80,000
Santo’s capital credit ............................. (72,000)
Bonus to old partners ........................... $ 8,000
(b) Cash ............................................................................ 45,000
B. Fell, Capital (7/10 X $16,500) ................................. 11,550
C. Otto, Capital (3/10 X $16,500) ............................... 4,950
D. Santo, Capital ................................................. 61,500
*EXERCISE 12-13B
1. N. Garland, Capital ..................................................... 45,000
S. Heerey, Capital ............................................... 22,500
E. Jenks, Capital ................................................. 22,500
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*EXERCISE 12-14B
1. B. Gambino, Capital ................................................... 50,000
U. Mackey, Capital ($7,000 X 4/7) .............................. 4,000
D. Caldwell, Capital ($7,000 X 3/7) ............................ 3,000
Cash .................................................................... 57,000
Capital balance of withdrawing
2. B. Gambino, Capital ................................................... 50,000
U. Mackey, Capital ($14,000 X 4/7) .................... 8,000
D. Caldwell, Capital ($14,000 X 3/7) ................... 6,000
Cash .................................................................... 36,000
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*EXERCISE 12-15B
(a) Cash ...................................................................... 70,000
Gorton, Capital
($220,000 X 25%) ........................................ 55,000
Horton, Capital
(b) Horton, Capital ..................................................... 80,000
Morton, Capital ($30,000 X 2/4) ........................... 15,000
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SOLUTIONS TO PROBLEMS—SET C
PROBLEM 12-1C
(a) Jan. 1 Cash ............................................................ 9,500
Accounts Receivable ................................. 15,000
Inventory ..................................................... 32,000
Equipment ................................................... 28,000
Allowance for Doubtful
1 Cash ............................................................ 6,000
Accounts Receivable ................................. 23,000
Inventory ..................................................... 21,000
Equipment ................................................... 18,000
Price, Capital ....................................... 26,000
(b) Jan. 1 Cash ............................................................ 3,000
Wonder, Capital ................................... 3,000
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PROBLEM 12-1C (Continued)
(c) WONDER-PRICE COMPANY
Balance Sheet
January 1, 2017
Assets
Current assets
Cash ($9,500 + $6,000 + $3,000 + $13,000) ... $ 31,500
Accounts receivable
($15,000 + $23,000) .................................. $38,000
Less: Allowance for doubtful accounts
($3,500 + $5,000) .............................. 8,500 29,500
Inventory ($32,000 + $21,000) ..................... 53,000
Total current assets ............................ 114,000
Liabilities and Owners’ Equity
Current liabilities
Notes payable .............................................. $ 25,000
Accounts payable ($20,000 + $37,000) ...... 57,000
Total current liabilities ........................ 82,000
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PROBLEM 12-2C
(a) (1) Income Summary ................................................ 40,000
J. Mesa, Capital ($40,000 X 50%) ................ 20,000
(2) Income Summary ................................................ 30,000
J. Mesa, Capital ($11,000 + $3,000) ............ 14,000
L. Elston, Capital ($10,000 + $3,000)............. 13,000
J. Yaeger, Capital ($0 + $3,000) .................. 3,000
Net income ............................... $30,000
Salary allowances
(3) Income Summary ................................................ 33,000
J. Mesa, Capital
($3,300 + $18,000 + $2,900) ..................... 24,200
L. Elston, Capital ($2,000 + $2,900) ............ 4,900
J. Yaeger, Capital ($1,000 + $2,900) ........... 3,900
Net income ............................... $33,000
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PROBLEM 12-2C (Continued)
(b)
DIVISION OF NET INCOME
J. Mesa
L. Elston
J. Yaeger
Total
Salary allowance ........................
Interest allowance
J. Mesa
($33,000 X 10%).................
L. Elston
Total salaries and interest .........
Remaining income, $2,700
J. Mesa
($2,700 X 1/3) .....................
L. Elston
$18,000
3,300
21,300
2,900
2,000
(
1,000
$18,000
(
24,300
(c) MEY COMPANY
Partners’ Capital Statement
For the Year Ended December 31, 2017
J. Mesa
L. Elston
J. Yaegerr
Total
Capital, January 1 ..............
Add: Net income ..............
$33,000
24,200
$20,000
4,900
$10,000
3,900
$63,000
33,000
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PROBLEM 12-3C
(a) SALMON COMPANY
Schedule of Cash Payments
Item
Cash
+
Noncash
Assets
=
Liabilities
+
Melton
+
Peters
+
Abbott
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PROBLEM 12-3C (Continued)
(b) (1)
Apr. 30 Cash ......................................................... 43,000
Allowance for Doubtful Accounts .......... 1,000
Accumulated Depreciation ..................... 10,000
Loss on Realization ................................. 10,000
Noncash assets (net) ........... $53,000
(2)
30 Melton, Capital ($10,000 X 50%) ............. 5,000
(3)
30 Notes Payable .......................................... 16,000
(4)
30 Melton, Capital ($23,000 – $5,000) .......... 18,000
Peters, Capital ($11,200 – $3,000) ........... 8,200
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PROBLEM 12-3C (Continued)
(c)
Cash
Peters, Capital
4/30 Bal. 28,000
4/30 (1) 43,000
4/30 (3) 42,000
4/30 (4) 29,000
4/30 (2) 3,000
4/30 (4) 8,200
4/30 Bal. 11,200
Melton, Capital
Abbott, Capital
4/30 (2) 5,000
4/30 Bal. 23,000
4/30 (2) 2,000
4/30 Bal. 4,800
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*PROBLEM 12-4C
(a) (1) Sigle, Capital ...................................................... 12,000
Watson, Capital ........................................... 12,000
(3) Cash .................................................................... 46,000
Dexter, Capital ($10,000 X 5/10) ......................... 5,000
Emley, Capital ($10,000 X 3/10) ......................... 3,000
Sigle, Capital ($10,000 X 2/10) ........................... 2,000
Watson, Capital ........................................... 56,000
Total capital of existing
partnership .................... $ 94,000
Investment by Watson ...... 46,000
(4) Cash .................................................................... 30,000
Dexter, Capital ($5,200 X 5/10) ................... 2,600
Emley, Capital ($5,200 X 3/10).................... 1,560
Sigle, Capital ($5,200 X 2/10)...................... 1,040
Watson, Capital ........................................... 24,800
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*PROBLEM 12-4C (Continued)
Watson’s capital credit
($124,000 X 20%) .............. $24,800
Investment by new
partner, Watson ............... $30,000
Watson’s capital credit ........ 24,800
Bonus to old partners ......... $ 5,200
(b) Total capital after admission ($25,500 ÷ 15%) ..................... $170,000
Total capital before admission ............................................. 94,000
(1) Cash investment by Watson ................................................. $ 76,000
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*PROBLEM 12-5C
(a) (1) B. Ross, Capital .................................................. 20,000
A. Ely, Capital ............................................. 10,000
L. Howe, Capital .......................................... 10,000
(2) B. Ross, Capital .................................................. 20,000
L. Howe, Capital .......................................... 20,000
(4) B. Ross, Capital .................................................. 20,000
A. Ely, Capital ($9,000 X 6/9) ...................... 6,000
L. Howe, Capital ($9,000 X 3/9) .................. 3,000
Cash ............................................................ 11,000
(b) (1) Howe’s capital after withdrawal ..................................... $32,000
Howe’s capital before withdrawal .................................. 30,000
Bonus to Howe ................................................................ $ 2,000
Howe’s income ratio with Ely ......................................... 3/9
Total bonus ($2,000 ÷ 3/9) ............................................... $ 6,000
(2) Ross’s capital balance .................................................... $20,000

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