Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 12, Problem 12SP
1.
To determine
State the factor that has to be considered by Person S while deciding the
2.
To determine
Prepare the
3.
To determine
Prepare the journal entry required to admit a new partner if the new partner invests cash of $20,090.
4.
To determine
State the percentage of new partners’ equity percentage.
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At the start of 2020, Santana Rey is considering adding a partner to her business. She envisions the new partner taking the lead in generating sales of both services and merchandise for Business Solutions. S. Rey’s equity in Business Solutions as of January 1, 2020, is $80,360. Required 1. S. Rey is evaluating whether the prospective partner should be an equal partner with respect to capital investment and profit sharing (1:1) or whether the agreement should be 4:1 with Rey retaining fourfifths interest with rights to four-fifths of the net income or loss. What factors should she consider in deciding which partnership agreement to offer? 2. Prepare the January 1, 2020, journal entry(ies) necessary to admit a new partner to Business Solutions through the purchase of a partnership interest for each of the following two separate cases: (a) 1:1 sharing agreement and (b) 4:1 sharing agreement. 3. Prepare the January 1, 2020, journal entry(ies) required to admit a new partner if the new…
I - PROBLEM SOLVING:
Eugene and Alfred are partners in their Ghost Fighting business.
Alfred is the managing partner. As of December 2020, their capital account
showed the following:
Eugene Capital_
45000 300000 1-Jan
Alfred Capital
90000450000 1-Jan
1-Jul
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1-Dec
30000
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1-Dec
105000
150000 1-Jun
105000 1-Nov
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CASE I: Assuming the partnership earned a net profit of P360,000.
CASE II: Assuming the partnership incurred a net los of P60,000
Required: On your answer sheet (yellow pad), using the following agreements,
distribute the profit and losses in Case I & II to Eugene & Alfred.
Make a journal entry after your computation.
1) Equally
2:4 ratio to Eugene and Alfred, respectively
3)
2)
4)
5)
6) Based on average capital balances
60%:40% ratio respectively
Based on beginning capital balances
Based on ending capital balances
Using Case I only, the partners agreed to divide the net profit by:
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Problem 1
At the end of the its first year of operations on December 31, 2020, HEART ATTACK Company's
accounts show the following:
Capital
P 48,000
P 30,000
P 25,000
Partner
Drawings
Mr. Chicharon
P 23,000
P 14,000
P 10,000
Mr. Bulalo
Mr. L. Kawali
The capital balances represents each partner's initial capital investment. Therefore, net income
or net loss for 2020 has not been closed to the partners' capital accounts.
Instructions:
a. Journalize the entry to record the division of net income for the year 2020 under each of the
following independent assumptions.
1. Net income is P 30,000. Income is shared 6:3:1
2. Net income is P 40,000, Mr. Chicharon and Mr. Bulalo are given salary allowances of P 15,000
and P 10,000, respectively. The remainder is shared equally.
3. Net income is P 19,000. Each partner is allowed interest of 10% on beginning capital
balances. Mr. Chicharon is given a P 15,0000 salary allowance. The remainder is shared equally
b. Prepare a schedule showing the division…
Chapter 12 Solutions
Principles of Financial Accounting.
Ch. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQ
Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - The Field, Brown Snow partnership was begun with...Ch. 12 - Prob. 10QSCh. 12 - Determine whether each characteristic describes a...Ch. 12 - For each separate case, indicate which type of...Ch. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 1APCh. 12 - Prob. 2APCh. 12 - Prob. 3APCh. 12 - Prob. 4APCh. 12 - Prob. 5APCh. 12 - Prob. 6APCh. 12 - Prob. 1BPCh. 12 - Prob. 2BPCh. 12 - Prob. 3BPCh. 12 - Prob. 4BPCh. 12 - Prob. 5BPCh. 12 - Prob. 6BPCh. 12 - Prob. 12SPCh. 12 - Prob. 1AACh. 12 - Prob. 2AACh. 12 - Review Samsungs 1938 to 1970 history at...Ch. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 3BTNCh. 12 - Prob. 5BTN
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