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CH 1 2 ACCOUNTING FOR PARTNERSHIPS Lecture 3, 4, 5, 6

CH 1 2 ACCOUNTING FOR PARTNERSHIPS Lecture 3, 4, 5, 6. Mata kuliah : F0024 – Pengantar Akuntansi II Tahun : 2010. QUESTIONS.

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CH 1 2 ACCOUNTING FOR PARTNERSHIPS Lecture 3, 4, 5, 6

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  1. CH 12ACCOUNTING FOR PARTNERSHIPSLecture 3, 4, 5, 6 Mata kuliah : F0024 – Pengantar Akuntansi II Tahun : 2010

  2. QUESTIONS The characteristics of a partnership include the following: (a) association of individuals, (b) limited life, and (c) co-ownership of property. Explain each of these terms. Jerry Kerwin is confused about the partnership characteristics of (a) mutual agency and (b) unlimited liability. Explain these two characteristics for Jerry.

  3. QUESTIONS 11. Are the financial statements of a partnership similar to those of a proprietorship? Discuss. 12. How does the liquidation of a partnership differ from the dissolution of a partnership?

  4. P12-1A The post-closing trial balances of two proprietorships on January 1, 2010, are presented below:

  5. P12-1A Patrick and Samuelson decide to form a partnership, Pasa Company, with the following agreed upon valuations for noncash assets

  6. P12-1A

  7. P12-1A All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Patrick will invest an additional $5,000 in cash, and Samuelson will invest an additional $19,000 in cash. Instructions: a. Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership.

  8. P12-1A • Journalize the additional cash investment by each partner. • Prepare a classified balance sheet for the partnership on January 1, 2010.

  9. P12-2A At the end of its first year of operations on December 31, 2010, CNU Company’s accounts show the following: The capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2010 has not been closed to the partners’ capital accounts.

  10. P12-2A Instructions: • Journalize the entry to record the division of net income for the year 2010 under each of the following independent assumptions. 1. Net income is $30,000. Income is shared 6 : 3 : 1 2. Net income is $37,000. Caplin and Newell are given salary allowances of $15,000 and $10,000, respectively. The remainder is shared equally. 3. Net income is $19,000. Each partner is allowed interest of 10% on beginning capital balances. Caplin is given a $12,000 salary allowance. The remainder is shared equally.

  11. P12-2A • Prepare a schedule showing the division of net income under assumption (3) above. c. Prepare a partners’ capital statement for the year under assumption (3) above.

  12. P12-4A At April 30, partners’ capital balances in SKG Company are: S Seger $52,000, J. Kensington $54,000, and T. Gomez $18,000. The income sharing ratios are 5 : 4 : 1, respectively. On May 1, the SKGA Company is formed by admitting D. Atchley to the firm as a partner. Instructions: • Journalize the admission of Atchley under each of the following independent assumptions. 1. Atchley purchases 50% of Gomez’s ownership interest by paying Gomez $16,000 in cash.

  13. P12-4A 2. Atchley purchases 331/3% of Kensington’s ownership interest by paying Kensington $15,000 in cash. 3. Atchley invests $66,000 for a 30% ownership interest, and bonuses are given to the old partners. 4. Atchley invests $46,000 for a 30% ownership interest, which includes a bonus to the new partner.

  14. P12-4A b. Kensington’s capital balance is $32,000 after admitting Atchley to the partnership by investment. If Kensington’s ownership interest is 20% of total partnership capital, what were: 1. Atchley’s cash investment 2. The bonus to the partner?

  15. P12-5A On December 31, the capital balances and income ratios in FAD Company are as follows: Instructions: • Journalize the withdrawal of Durham under each of the following assumptions:

  16. P12-5A 1. Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Durham’s ownership equity. Each receives 50% of Durham’s equity. 2. Ames agrees to purchase Durham’s ownership interest for $25,000 cash. 3. Durham is paid $34,000 from partnership assets, which includes a bonus to the retiring partner. 4. Durham is paid $22,000 from partnership assets, and bonuses to the remaining partners are recognized.

  17. P12-5A • If Ames’s capital balance after Durham’s withdrawal is $42,400 what were: 1. The total bonus to the remaining partners. 2. The cash paid by the partnership to Durham?

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