Concept explainers
Admission of partner:Changes in the membership of
To choose:The correct answer to determine revised capital balances.
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Advanced Financial Accounting
- Martha, Steve, and Lew form a partnership to operate a grocery store. For each of the following contributions by the partners, indicate (1) the amount of income or gain recognized, if any, by the partner, and (2) the partner's basis in the partnership interest immediately after the contribution including the allocation of liabilities. If an amount is zero, enter "0". Do not round your intermediate computations. a. Martha contributes property with a basis of $45,000 and subject to a $75,000 liability to the partnership for a one-third partnership interest worth $105,000. The partnership assumes the liability. Income or gain recognized: $ Her basis in the partnership interest:arrow_forwardAssume the partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to Coburn and $25,000 to Webb, with the remainder divided 35% to Coburn and 65% to Webb. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation > Debit Creditarrow_forwardBarbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $15,000 cash, and Nichols contributes $10,000 cash and equipment having a book value of $3,500.Prepare the entry to record Nichols’s investment in the partnership, assuming the equipment has a fair value of $4,000. What is the account title and explanation? what is debit? what is credit?arrow_forward
- Salim and Rashid form a partnership, investing OR 80,000 and OR 120,000, respectively. Required: Determine their shares of net income: Net income is OR 60,000. The first OR 30,000 is shared on the basis of partner capital balances. The next OR 20,000 is based on partner services, with Salim getting 40% and Rashid 60%. The remainder is shared equally. How can partnership profits and losses be allocated. Please I need answer for these questions. Thanksarrow_forwardBarbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $24,000 cash, and Nichols contributes $10,000 cash and equipment having a book value of $5,120. Prepare the entry to record Nichols's investment in the partnership, assuming the equipment has a fair value of $6.400. (Credit account titles are automatically indented when amount is entered. Do not indent manually) Account Titles and Explanation Debit Creditarrow_forwardBarbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $18,000 cash, and Nichols contributes $10,000 cash and equipment having a book value of $3,600. Prepare the entry to record Nichols's investment in the partnership, assuming the equipment has a fair value of $4,800. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation v Debit Creditarrow_forward
- The ABC Partnership is to be liquidated and you have been hired to prepare a Schedule of Cash Payments for the partnership as well as all required journal entries. Partners Alexa, Bitsy, and Coco share income and losses in the ratio of 4:3:3, respectively. Assume the following: 1. The noncash assets were sold for $70,000. 2. Liabilities were paid in full. 3. The remaining cash was distributed to the partners. (If any partner has a capital deficiency, assume that the partner is unable to make up for the capital deficiency.) Instructions Use the above information. a. Prepare a complete Schedule of Cash Payments. b. Prepare all necessary journal entries on the journal page below. ABC PARTNERSHIP Schedule of Cash Payments Balances Before Liquidation: Item Cash $25,000 + Noncash Assets $150,000 = Liabilities $50,000 + Alexa Capital $25,000 + Bitsy Capital $35,000 + Coco Capital $65,000arrow_forwardAfter the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. Cash Grayson Jackson, Capital Harry Barge, Capital Lewan Gorman, Capital b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $arrow_forwardPhil Phoenix and Tim Tucson are partners in an electrical repair business. Their respective capital balances are $92,800 and $48,100, and they share profits and losses equally. Because the partners are confronted with personal financial problems, they decided to admit a new partner to the partnership. After an extensive interviewing process they elect to admit Don Dallas into the partnership.Prepare the journal entry to record the admission of Don Dallas into the partnership under each of the following conditions: 1. Don acquires one-fourth of Phil’s capital interest by paying $28,900 directly to him. 2. Don acquires one-fifth of each of Phil’s and Tim’s capital interests. Phil receives $24,500 and Tim receives $15,300 directly from Don. 3. Don acquires a one-fifth capital interest for a $58,200 cash investment in the partnership. Total capital after the admission is to be $199,100. 4. Don invests $39,820 for a one-fifth interest in partnership capital. Implicit…arrow_forward
- Sal Solan has a capital balance of $26,000; Sharon Silver's balance is $25,000. Grant Hill pays $110,000 to purchase Silver's interest in the Solan & Silver partnership. Silver gets the full $110,000. Requirements 1. Journalize the partnership's transaction to admit Hill to the partnership. 2. Must Solan accept Hill as a full partner? What rights does Hill have after purchasing Silver's interest in the partnership? Requirement 1. Journalize the partnership's transaction to admit Hill to the partnership. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Creditarrow_forwardTodd Stratton has a capital balance of $24,000; Sharon Silver's balance is $19,000. Gavin Howard pays $100,000 to purchase Silver's interest in the Stratton & Silver partnership. Silver gets the full $100,000. Requirements 1. Journalize the partnership's transaction to admit Howard to the partnership. 2. Must Stratton accept Howard as a full partner? What rights does Howard have after purchasing Silver's interest in the partnership? Requirement 1. Journalize the partnership's transaction to admit Howard to the partnership. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Date Accounts and Explanation Debit Creditarrow_forwardLewis, Zapata, and Fowler share equally in net income and net losses. After the partnership sells all assets for cash, divides the losses on realization, and pays the liabilities, the balances in the capital accounts are as follows: Lewis, $34,000 Cr.; Zapata, $74,800 Cr.; Fowler, $21,800 Dr. Question Content Area a. What term is applied to the debit balance in Fowler's capital account? b. What is the amount of cash on hand?$fill in the blank 28030402ff86fa0_2 Question Content Area c. Journalize the transaction that must take place for Lewis and Zapata to receive cash in the liquidation process equal to their capital account balances. If an amount box does not require an entry, leave it blank. blank - Select - - Select - - Select - - Select -arrow_forward