Financial Accounting 2CHAPTER 12 - Tài liệu tham khảo | Đại học Hoa Sen

Financial Accounting 2 CHAPTER 12 FORMING A PARTNERSHIP
EX 12-1: Recording partner’s original investment
Beyonce Sheffield and Brittany Field decide to form a partnership by combining the
assets of their separate businesses. Sheffield contributes the following assets to the
partnership: cash, $18,000; accounts receivable with a face amount of $146,000 and an
allowance for doubtful accounts of $4,200; merchandise inventory with a cost of $92,000;
and equipment with a cost of $136,000 and accumulated depreciation of $45,000.
The partners agree that $5,000 of the accounts receivable are completely worthless and
are not to be accepted by the partnership, that $5,700 is a reasonable allowance for the
uncollectibility of the remaining accounts, that the merchandise inventory is to be recorded
at the current market price of $98,400, and that the equipment is to be valued at $81,500.
Journalize the partnership’s entry to record Sheffield’s investment.
EX 12-2: Recording partner’s original investment
Amanda Carcello and Miguel Gaspar form a partnership by combining assets of their
former businesses. The following balance sheet information is provided by Carcello, sole proprietorship:
Carcello obtained appraised values for the land and equipment as follows: Land $275,000 Equipment 30,500
An analysis of the accounts receivable indicated that the allowance for doubtful accounts should be increased to $8,500.
Journalize the partnership’s entry for Carcello’s investment.
EX 12-3: Dividing partnership income
Nicole Murphy and Ashley Drake formed a partnership, investing $270,000 and $90,000,
respectively. Determine their participation in the year’s net income of $350,000 under each
of the following independent assumptions:
(a) no agreement concerning division of net income;
(b) divided in the ratio of original capital investment;
(c) interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3;
(d) salary allowances of $40,000 and $50,000, respectively, and the balance divided equally;
(e) allowance of interest at the rate of 5% on original investments, salary allowances of
$40,000 and $50,000, respectively, and the remainder divided equally.
EX 12-4: Dividing partnership income
Determine the income participation of Murphy and Drake, according to each of the five
assumptions as to income division listed in Exercise 12-3, if the year’s net income is $126,000.
EX 12-5: Dividing partnership net loss
Megan West and Jon Sokolov formed a partnership in which the partnership agreement
provided for salary allowances of $45,000 and $35,000, respectively. Determine the
division of a $40,000 net loss for the current year, assuming remaining income or losses are
shared equally by the two partners. WITHDRAWAL OF A PARTNER
EX 12-9: Partner income and withdrawal journal entries
The notes to the annual report for KPMG LLP (U.K.) indicated the following policies
regarding the partners’ capital:
The allocation of profits to those who were partners during the financial year occurs
following the finalization of the annual financial statements. During the year, partners
receive monthly drawings and, from time to time, additional profit distributions. Both
the monthly drawings and profit distributions represent payments on account of current-
year profits and are reclaimable from partners until profits have been allocated.
Assume that the partners draw £50 million per month for 2014 and the net income for the year
is £740 million. Journalize the partner capital and partner drawing control accounts in the following requirements:
a. Provide the journal entry for the monthly partner drawing for January.
b. Provide the journal entry to close the income summary account at the end of the year.
c. Provide the journal entry to close the drawing account at the end of the year.
d. Why would partner drawings be considered “reclaimable” until profits have been allocated?
EX 12-10: Admitting new partners
May Cheng and Hannah Webster are partners who share in the income equally and have
capital balances of $207,000 and $62,500, respectively. Cheng, with the consent of
Webster, sells one-third of her interest to Michael Cross. What entry is required by the
partnership if the sales price is (a) $60,000? (b) $80,000?
EX 12-11: Admitting new partners who buy an interest and contribute assets
The capital accounts of Aaron Garner and Ricardo Fernandez have balances of $180,000
and $120,000, respectively. Aisha Carpenter and Isabel Diaz are to be admitted to the
partnership. Carpenter buys one-fifth of Garner’s interest for $50,000 and one-fourth of
Fernandez’s interest for $32,000. Diaz contributes $90,000 cash to the partnership, for
which she is to receive an ownership equity of $90,000.
a. Journalize the entries to record the admission of (1) Carpenter and (2) Diaz.
b. What are the capital balances of each partner after the admission of the new partners?
EX 12-12: Admitting new partner who contributes assets
After the tangible assets have been adjusted to current market prices, the capital accounts of
Alex Jensen and Elon Craig have balances of $120,000 and $180,000, respectively. Marco
Vega is to be admitted to the partnership, contributing $70,000 cash to the partnership, for
which he is to receive an ownership equity of $78,000. All partners share equally in income.
a. Journalize the entry to record the admission of Vega, who is to receive a bonus of $8,000.
b. What are the capital balances of each partner after the admission of the new partner?
c. Why are tangible assets adjusted to current market prices, prior to admitting a new partner?
c. Tangible assets should be adjusted to current market prices so that the new partner does
not share in any gains or losses from changes in market prices prior to being admitted. For
example, if the market price of land doubled prior to admitting a new partner, the existing
partners should realize the increase in the value of the land in their capital accounts prior to
the new partner’s admission. Otherwise, the new partner would share in the increase in the market value of the land.
EX 12-13: Admitting new partner with bonus
Cody Jenkins and Jun Ito formed a partnership to provide landscaping services. Jenkins and
Ito shared profits and losses equally. After all the tangible assets have been adjusted to
current market prices, the capital accounts of Cody Jenkins and Jun Ito have balances of
$72,000 and $38,000, respectively. Valeria Solano has expertise with using the computer to
prepare landscape designs, cost estimates, and renderings. Jenkins and Ito deem these skills
useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $30,000.
a. Determine the recipient and amount of the partner bonus.
b. Provide the journal entry to admit Solano into the partnership.
c. Why would a bonus be paid in this situation?
EX 12-14: Admitting a new LLC member with bonus
Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all
income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join
the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their
current market values. The revaluation resulted in medical equipment being increased by
$40,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were
$154,000 and $208,000, respectively.
a. Provide the journal entry for the asset revaluation.
b. Provide the journal entry for the bonus under the following independent situations:
1. Lin purchased a 30% interest in Alert Medical, LLC, for $228,000.
2. Lin purchased a 25% interest in Alert Medical, LLC, for $124,000.
EX 12-15: Admitting new partner with bonus
G. Ferris and T. Martinez are partners in Elegant Event Consultants. Ferris and Martinez
share income equally. D. Perez will be admitted to the partnership. Prior to the admission,
equipment was revalued downward by $18,000. The capital balances of each partner are
$133,000 and $85,000, respectively, prior to the revaluation.
a. Provide the journal entry for the asset revaluation.
b. Provide the journal entry for Perez’s admission under the following independent situations:
1. Perez purchased a 20% interest for $40,000.
2. Perez purchased a 30% interest for $112,000.