Problem D-4A (50 minutes)
Part 1
a)
Feb. 1
Benson, Capital ………………………………………………..
138,000
b)
Feb. 1
Benson, Capital ………………………………………………..
138,000
c)
Feb. 1
Benson, Capital ………………………………………………..
138,000
d)
Feb. 1
Benson, Capital ………………………………………………..
138,000
Meir, Capital* ……………………………………………………
e)
Feb. 1
Benson, Capital ………………………………………………..
138,000
Accumulated Depreciation—Equipment ……………
Problem D-4A (Concluded)
Part 2
a)
Feb. 1
Cash ………………………………………………………………..
200,000
Rhodes, Capital* …………………………………………
b)
Feb. 1
Cash ………………………………………………………………..
145,000
Meir, Capital ($41,250* x 3/10) …………………………..
Rhodes, Capital …………………………………………..
c)
Feb. 1
Cash ………………………………………………………………..
262,000
Meir, Capital ($46,500* x 3/10) ………………………
13,950
Benson, Capital ($46,500* x 2/10) …………………
Lau, Capital ($46,500* x 5/10) ……………………….
23,250
Rhodes, Capital …………………………………………..
Problem D-5A (75 minutes)
Note: All entries in this problem are dated May 31.
1.
(a)
Cash ………………………………………………………………..
600,000
Inventory …………………………………………………….
537,200
Gain on Sale of Inventory …………………………..
62,800
(b)
Gain on Sale of Inventory …………………………..
62,800
Kendra, Capital ($62,800 x 3/6) …………………….
31,400
Cogley, Capital ($62,800 x 2/6) …………………….
20,933
Mei, Capital ($62,800 x 1/6) ………………………….
10,467
(c)
245,500
Cash ……………………………………………………….
245,500
(d)
124,400
233,433
177,467
Cash* ……………………………………………………….
535,300
2.
(a)
Cash ………………………………………………………………..
500,000
37,200
Inventory …………………………………………………….
(b)
18,600
12,400
Loss on Sale of Inventory …………………………..
(c)
245,500
Cash ……………………………………………………….
(d)
74,400
200,100
160,800
Cash* ……………………………………………………….
Problem D-5A (Concluded)
3.
(a)
Cash ………………………………………………………………..
320,000
217,200
108,600
Cash ………………………………………………………………..
(c)
245,500
140,100
130,800
(a)
Cash ………………………………………………………………..
250,000
287,200
143,600
(c)
245,500
102,266
PROBLEM SET B
Problem D-1B (45 minutes)
Preliminary calculations
Plan (a) & Plan (c)
Percentages based on initial investments
Green = $156,000/$260,000 = 60%
Plan (b)
Percentages based on time
Green = 1.000/1.333 = 75%
Plan (c) & Plan (d)
Salary allowance
Bell = 10% x $104,000 = $10,400
Income (Loss)
Year 1
Sharing Plan
Calculations
Bell
Green
(a)
40% x $36,000 loss ……………………………………………
$(14,400)
60% x $36,000 loss ……………………………………………
25% x $36,000 loss ……………………………………………
75% x $36,000 loss ……………………………………………
(c)
Salary allowance ………………………………………………
40% x ($36,000 loss + $48,000 salary) ………………..
60% x ($36,000 loss + $48,000 salary) ………………..
Totals ……………………………………………………….
Salary allowance ………………………………………………
Totals ……………………………………………………….
Problem D-1B (Concluded)
Income (Loss)
Year 2
Sharing Plan
Calculations
Bell
Green
(a)
40% x $76,000 income ………………………………………
$30,400
60% x $76,000 income ………………………………………
25% x $76,000 income ………………………………………
$19,000
75% x $76,000 income ………………………………………
(c)
Salary allowance ………………………………………………
$11,200
Totals ……………………………………………………….
$11,200
Salary allowance ………………………………………………
$10,400
Income (Loss)
Year 3
Sharing Plan
Calculations
Bell
Green
(a)
40% x $188,000 income …………………………..
$75,200
60% x $188,000 income …………………………..
25% x $188,000 income …………………………..
$47,000
75% x $188,000 income …………………………..
(c)
$56,000
Totals ……………………………………………………….
$56,000
Salary allowance ………………………………………………
$10,400
Problem D-2B (50 minutes)
1.
Dec. 31
Income Summary ……………………………………………..
270,000
2.
Dec. 31
Income Summary ……………………………………………..
270,000
($164,000/$328,000) x $270,000 = $135,000
($98,400/$328,000) x $270,000 = $81,000
3.
Dec. 31
270,000
62,960
*Supporting calculations
Albin
Peters
Ramsey
Total
Net income …………………………………………
$270,000
Salary allowances
Peters ……………………………………………..
$72,000
Total salaries ……………………………………..
Interest allowances
Albin (10% on $164,000) ……………………
Ramsey (10% on $65,600) …………………
Bal. after interest and salaries ……………..
Balance allocated equally ……………………
Balance of income …………………………..
$ 0
Problem D-3B (30 minutes)
Part 1
Income (Loss)
Sharing Plan
Calculations
Cook
Xi
Schwartz
Total
(a)
$240,000/3 ……………………………………………
$80,000
$ 80,000
$240,000
(b)
$240,000 x ($144,000/$480,000) ………………..
$72,000
Total allocated …………………………..
$72,000
$ 60,000
$240,000
(c)
Net income …………………………………………..
$240,000
Salary allowances …………………………..
$ 30,000
(150,000)
Balance of income…………………………..
Interest allowances
Total interest …………………………..
Balance of income…………………………..
Balance allocated equally……………………..
Balance of income…………………………..
$ 0
Problem D-3B (Concluded)
Part 2
CXS PARTNERSHIP
Statement of Partners’ Equity
For Year Ended December 31
Cook
Xi
Schwartz
Total
Beginning capital balances ……………..
$ 0
$ 0
$ 0
$ 0
Plus
Investments by owners …………………..
Net income
Part 3
Dec. 31
Income Summary ……………………………………………..
87,600
Cook, Capital ……………………………………………………
18,000
38,000
Schwartz, Capital ……………………………………………..
24,000
Problem D-4B (50 minutes)
Part 1
a)
Apr. 30
Gibbs, Capital …………………………………………………..
606,000
Brady, Capital ……………………………………………..
Apr. 30
Gibbs, Capital …………………………………………………..
606,000
Cannon, Capital……………………………………………
Apr. 30
Gibbs, Capital …………………………………………………..
606,000
Cash …………………………………………………………..
d)
Apr. 30
Gibbs, Capital …………………………………………………..
606,000
Cook, Capital* …………………………………………………
Chan, Capital** ……………………………………………
Cash …………………………………………………………..
Apr. 30
Gibbs, Capital …………………………………………………..
606,000
Accum. Deprec.—Manufacturing Equipment ……..
336,000
Cook, Capital*……………………………………………..
Chan, Capital** ……………………………………………
Manufacturing Equipment …………………………..
Cash …………………………………………………………..
Problem D-4B (Concluded)
Part 2
a)
Apr. 30
Cash ………………………………………………………………..
300,000
b)
Apr. 30
Cash ………………………………………………………………..
196,000
Cook, Capital ($83,200* x 1/10) …………………………..
Chan, Capital ($83,200* x 4/10) …………………………..
c)
Apr. 30
Cash ………………………………………………………………..
426,000
Problem D-5B (75 minutes)
Note: All entries in this problem are dated Jan. 18.
1.
(a)
Cash ………………………………………………………………..
650,000
617,200
(c)
342,600
342,600
202,360
140,120
656,000
2.
(a)
Cash ………………………………………………………………..
530,000
617,200
(c)
342,600
342,600
265,520
178,360
536,000