At year-end, the Circle City partnership has the following capital balances: Manning, Capital . . . . . . . . . $130,000Gonzalez, Capital . . . . . . . . 110,000Clark, Capital . . . . . . . . . . . . 80,000Freeney, Capital . . . . . . .. . . 70,000 Profits and losses are split on a 3:3:2:2 basis, respectively. Clark decides to leave the partnership and is paid $90,000 from the business based on the original contractual agreement.The payment made to Clark beyond his capital account was for Clark’s share of previously unrecognized goodwill. After recognizing partnership goodwill, what is Manning’s capital balance after Clark withdraws? Choose the correct. a. $133,000 b. $137,500 c. $140,000 d. $145,000

At year-end, the Circle City partnership has the following capital balances: Manning, Capital . . . . . . . . . $130,000Gonzalez, Capital . . . . . . . . 110,000Clark, Capital . . . . . . . . . . . . 80,000Freeney, Capital . . . . . . .. . . 70,000 Profits and losses are split on a 3:3:2:2 basis, respectively. Clark decides to leave the partnership and is paid $90,000 from the business based on the original contractual agreement.The payment made to Clark beyond his capital account was for Clark’s share of previously unrecognized goodwill. After recognizing partnership goodwill, what is Manning’s capital balance after Clark withdraws? Choose the correct. a. $133,000 b. $137,500 c. $140,000 d. $145,000

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 9E

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The Distance Plus partnership has the following capital balances at the beginning of the current year:Tiger (50% of profits and losses) . . . . . . . . . . . $85,000Phil (30%) . . . . . . . . . . . . . . . . . 60,000Ernie (20%) . . . . . . . . . . . . . . . . 55,000 Each of the following questions should be viewed independently.a. If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.b. If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.c. If Sergio invests $72,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used.
The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda . . . . . . . . . . . . . . . .. . $230,000Adams . . . . . . . . . . . . . . . . . . 190,000Fergie . . . . . . . . . . . . . . . . . . 160,000Gomez . . . . . . . . . . . . . . . . . 140,000Total capital . . . . . . . . . . . . . $720,000 Answer each of the following independent questions:a. Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $190,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners?b. Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $280,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners?
A partnership has the following capital balances: Comprix (35% of gains and losses) . . . . . . . . . . $150,000Heflin (40%) . . . . . . . . . . . .. . . 300,000Kaplan (25%) . . . . . . . . . . . . . 320,000 Mahar is going to pay a total of $200,000 directly to these three partners to acquire a 25 percent ownership interest from each. Goodwill is to be recorded. What is Heflin’s capital balance after the transaction? Choose the correct. a. $225,000b. $234,000c. $312,000d. $360,000
17. The following information relates to XXX and YYY’s partners capital accounts for fiscalyear ending June 30: XXXX YYY Balance, July 1 P86,400 P115,200 Add: Additional investment, January 1 38,400 19,200 Net Income for the year: Salaries 20,500 14,500 Interest 7,920 9,360 Bonus 3,720 Remainder 14,880 9,920 Total 171,820 168,180 Deduct: Drawings Monthly amounts 15,070 15,060 Additional drawings, June 30 2,400 403 Balance, June 30 154,350 152,717 Bonus is based on net income after salaries, interest and bonus. If the net income remains the same the following fiscal year, and there is no change in the partnership agreement nor any additional investment, how much will be YYY’s total share of the net income in the following year? A. P33,577 B. P33,780 C. P33,874 D. P33,696
A partnership begins its first year with the following capital balances:Alexander, Capital . . . . . . . . . . . . . . . . . . . . . . . . $ 90,000Bertrand, Capital . . . . . . . . . . . . . . . . . . . . . . . . . 100,000Coloma, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 The articles of partnership stipulate that profits and losses be assigned in the following manner:∙ Each partner is allocated an interest equal to 5 percent of the beginning capital balance.∙ Bertrand is allocated compensation of $45,000 per year.∙ Any remaining profits and losses are allocated on a 3:3:4 basis, respectively.∙ Each partner is allowed to withdraw up to $25,000 cash per year.Assuming that the net income is $115,000 and that each partner withdraws the maximum amountallowed, what is the balance in Coloma’s capital account at the end of the year?a. $143,000b. $135,000c. $168,000d. $164,000
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Cash . . . . . . . . . . . . . . . . . . . $ 40,000 Liabilities . . . . . . . . . . . . . . . . $ 66,000Other assets . . . . . . . . . . . . 300,000Winn, capital (50% of profits and losses) . . . . . . . . . . . . . . . . 100,000Xie, capital (30%) . . . . . . . . . . . 84,000Yang, capital (10%) . . . . . . . . . . . 50,000Zed, capital (10%) . . . . . . . . . . 40,000 Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $10,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $10,000 from the liquidation.Determine the amount for which the partnership must sell the other assets to ensure that Zed receives $10,000 from the liquidation. Liquidation expenses are expected to be $30,000
AAA, BBB, and CCC are partners sharing profits and losses in the ratio of 5:3:2. During the year their investments and withdrawals are as follows: Investment of AMA, BBB and CCC for P200,000, P175,000 and P375,000 respectively. Withdrawals of AAA, BBB and CCC amounting to P125,000, P62,500 and P62,500 respectively. On December 31, 2021, the partners decided to liquidate their business. After exhausting partnership assets, liabilities of P125,000 remain unpaid. AAAs personally insolvent. The gain or loss on realization is: a. -125,000b. -625,000c. 125,000d. 625,00
For the year 2021, the partnership of AMMAR and BANU realized a net profit of P240,000. The capital accounts of the partners show the following postings: Jan. 1 May 1 July 1 Aug. 1 Oct. 1 AMMAR Debit Credit Debit Credit 20,000 10,000 120,000 BANU 10,000 10,000 5,000 80,000 20,000 Question 5 If the profits are to be divided based on average capital, how much will be the share of AMMAR?
AAA, BBB, and CCC are partners sharing profits and losses in the ratio of 5:3:2. During the year their investments and withdrawals are as follows: Investment of AAA, BBB and CCC for P200,000, P175,000 and P375,000 respectively. Withdrawals of AAA, BBB and CCC amounting to P125,000, P62,500 and P62,500 respectively. On December 31, 2021, the partners decided to liquidate their business. After exhausting partnership assets, liabilities of P125,000 remain unpaid. AAA is personally insolvent. The gain or loss on realization is: -625,000 625,000 125,000 -125,000
Jpea, Jic, and Jfenix formed a partnership and named it ESBIEYEY. At the end of the year, the partnership earned a profit of P 1,000,000. The capital balances areP 250,000, P 280,000, and P 270,000 for Jpea, Jic, and Jfenix, respectively. The partners agreed to distribute the profit as follows: • Interest to ending capital of 10% will be given Jpea and Jic will be given a salary amounting to P 150,000 each Jfenix will be given a bonus of 10% of net income after interest, salary and bonus • Remaining profit is to be distributed equally 26. How much is the bonus given to Jfenix? c. P 67,000 d. P 60,909 а. р 62,000 b. Р 56, 364 27. How much is Jpea's share in net income? a. P 364,879 b. P 360,879 c. P 365, 879 d. P 362,879 28. How much is Jic's share in net income? a. P 364,879 b. P 360,879 c. P 365,879 d. P 362,879
X, Y, and Z are partners sharing profits and losses in the ratio of 5:3:2. During the year, their investments and withdrawals are as follows: Investment of X, Y, and Z for P200,000, P175,000 and P375,000 respectively. Withdrawals of X, Y, and Z amounting to P125,000, P62500 and P62,500 respectively. On December 31, 2021, the partners decided to liquidate their business. After exhausting partnership assets, liabilities of P125,000 remain unpaid. X is personally insolvent. The gain or loss on realization is:
Item Nos. 6 and 7 are based on the following information: The following are the capital balances and profit and loss ratios of the partners Mona, Nona, and Ona: Capital Profit & Loss Ratio Mona- P 20,000 20% Nona 10,000 30% Ona- 5,000 50% Total-- P 35,000 100% After realization of the assets and payment of liabilities, the cash available for distribution was P 18,000. Any capital deficiency is uncollectible. 6. What was the loss on realization? a. P 15,000. C. P 17,000. b. P 16,000. d. P 18,000. 7. How should the cash be distributed? b. a. Mona, P 3,600; Nona, P 5,400; and Ona, P 4,000. Mona, P 6,000; Nona, P 6,000; and Ona, P 6,000. c. Mona, P 15,200; Nona, P 2,800; and Ona, P O. d. Mona, P 18,000; Nona, P 0; and Ona, PO.