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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
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
