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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
$20,000 $28,800 $42,800 $ (4,600)
2. a. Sails, Capital
Welch, Capital
Greenberg, Capital
=+++
2,300
2,300
+
SAILS, WELCH, AND GREENBERG
Statement of Partnership Liquidation
Capital
For Period November 1–30, 2016
4,600
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
Current liabilities:
Accounts payable $ 23,400
Notes payable 15,000
Assets
Liabilities
LANG AND CAPRI
Balance Sheet
April 1, 2015
CHAPTER 12 Accounting for Partnerships and Limited Liability Companies
Prob. 12–1B (Concluded)
3. 31 Income Summary
Whitney Lang, Capital*
Eli Capri, Capital*
* Computations:
Total
Interest allowance…………………………
…
$ 6,800 $ 12,000 $ 18,800
Salary allowance……………………………
…
36,000 22,000 58,000
Mar.
Lang Capri
118,000
63,400
54,600
12
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
b. …………………………………
…
168,000 252,000 60,000 90,000
Details:
Nickles
a. Net income (1:1)……………
…
$210,000 $210,000 $ 75,000 $75,000
b. Net income (2:3)……………
…
$168,000 $252,000 $ 60,000 $90,000
e. Interest allowance…………
…
$ 5,000 $ 7,500 $ 5,000 $ 7,500
Salary allowance……………
…
38,000 19,000 38,000 19,000
Remaining income (1:1)……
…
175,250 175,250 40,250 40,250
Howell
$420,000 $150,000
(1) (2)
$420,000 $150,000
Nickles Howell
CHAPTER 12 Accounting for Partnerships and Limited Liability Companies
Prob. 12–3B
1.
Professional fees
Operating expenses:
Salary expense
Depreciation expense—building
Total
Division of net income:
Salary allowance………………………
…
$50,000 $65,000 $115,000
2.
Total
Capital, January 1, 2016
Additional investment during
the yea
r
RAMIREZ AND XUE
RAMIREZ AND XUE
Income Statement
For the Year Ended December 31, 2016
$555,300
$384,900
12,900
Camila
Ramirez Xue
Ping
Statement of Partnership Equity
For the Year Ended December 31, 2016
Xue
$135,000 $260,000
20,000 20,000
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
Supplies 5,800
Current liabilities:
Accounts payable $ 12,400
Salaries payable 10,000
RAMIREZ AND XUE
Balance Sheet
December 31, 2016
Assets
Liabilities
1. Aug. 31 Asset Revaluations 1,800
Accounts Receivable 1,500
31 Merchandise Inventory 4,300
Asset Revaluations 4,300
$46,800 – $42,500.
31 Accumulated Depreciation—Equipment 15,500
Equipment 3,000
31 Asset Revaluations 15,000
Brian Caldwell, Capital 7,500
Adriana Estrada, Capital 7,500
2. Sept. 1 Adriana Estrada, Capital 26,000
CHAPTER 12 Accounting for Partnerships and Limited Liability Companies
Prob. 12–4B (Concluded)
3.
Current assets:
Cash1$44,300
Accounts receivable $18,000
Total assets $173,900
Current liabilities:
Accounts payable $ 8,900
CALDWELL, ESTRADA, AND MAYS
Balance Sheet
September 1, 2016
Assets
Liabilities
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
a. Sale of assets and division of loss +48,500 –84,500 — –9,000 –9,000 –18,000
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, 2016
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
Sale of assets and division of gain +217,000 –167,000 — +10,000 +20,000 +20,000
CHAPELLE, ROCK, AND PRYOR
Statement of Partnership Liquidation
For Period August 3–29, 2016
Capital
++=++
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
Sale of assets and division of loss +72,000 –167,000 —–19,000 –38,000 –38,000
2. a. Rock, Capital
b. Rock, Capital*
Pryor, Capital**
61,500
45,500
2,500
CHAPELLE, ROCK, AND PRYOR
Statement of Partnership Liquidation
Capital
For Period August 3–29, 2016
+= +++
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
CHAPTER 12 Accounting for Partnerships and Limited Liability Companies
CP 12–3
a.
Revenue per
Partner*
Deloitte & Touche………………………………
…
$4,430,994
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………………………………
…
$4,430,994 100%
PwC………………………………………………… 4,064,681 92%
*
CHAPTER 12 Accounting for Partnerships and Limited Liability Companies
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,
one party, Lindsey Wilson, is providing all of the funding, while the other two
