Weygandt, Accounting Principles, 12e
Chapter Twelve
Solutions to Challenge Exercises
Challenge Exercise 12-1 – Solution
(a) Cash ……………………………………………………………………………………. 60,000
Decker, Capital ……………………………………………………………… 60,000
(b)
THE DRT PARTNERSHIP
Balance Sheet
December 31, 2017
Assets
Current Assets
Cash …………………………………………………………………….. $70,000
Accounts Receivable …………………………………………….. $ 32,000
Less: Allowance for Doubtful Accounts……………………… 2,000 30,000
Total current assets …………………………………………. $ 100,000
Owners’ Equity
Owners’ Equity
Decker, Capital ……………………………………………………… $60,000
Challenge Exercise 12-2 – Solution
(a)
(1)
DIVISION OF NET INCOME
Macarty
Pace
Total
Salary allowance …………………………………..
Interest allowance
McGill ($40,000 X 15%) ……………………
Smyth ($50,000 X 15%) …………………..
$24,000
6,000
$14,000
7,500
$38,000
(2)
DIVISION OF NET INCOME
Macarty
Pace
Total
Total division of net income …………………..
Salary allowance …………………………………..
Interest allowance …………………………………
Total salaries and interest ……………………..
Remaining deficiency, ($6,500)
($24,000)
( 6,000)
( 30,000)
($14,000
( 7,500
( 21,500
$38,000
13,500
51,500
(b) (1) Income Summary ………………………………………………………….. 55,000
Macarty, Capital ……………………………………………………. 31,400
Pace, Capital ………………………………………………………… 23,600
(c) MACARTY AND PACE
Partners’ Capital Statement
For the Year Ended December 31, 2017
Macarty Pace Total
Capital, January 1 $40,000 $50,000 $ 90,000