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In: Accounting
1) The capital accounts of Hope and Indiana have balances of $230,000 and $190,000, respectively. Clint...
1) The capital accounts of Hope and Indiana have balances of $230,000 and $190,000, respectively. Clint and Casey are to be admitted to the partnership. Clint buys one-fifth of Hope’s interest for $60,000 and one-fourth of Indiana’s interest for $40,000. Casey contributes $90,000 cash to the partnership, for which he is to receive an ownership equity of $90,000. Required:
a. Journalize the entries to record the admission of Clint and Casey
b. What are the capital balances of each partner after the admission of the new partners
2) An analysis of the general ledger accounts indicates that equipment, with an original cost of $400,000 and accumulated depreciation of $340,000 on the date of sale, was sold for $40,000 during the year. Required: Using this information, indicate the items to be reported on the statement of cash flows using the indirect method.
3) The following transactions are for Riley Corporation: Dec 31 The accrued product warranty expense for the year is estimated to be 2.5% of sales. Sales for the year totaled $17,700,000. Dec 31 The accrued vacation pay for the year is estimated to be $150,000 Required: Journalize the transactions for Riley Corporation
Solutions
Expert Solution
a)
| Particulars | $ | $ | |
| 1 | Hope Capital (230,000 * 1/5) | 46,000 | |
| Indiana Capital (190,000*1/4 ) | 47,500 | ||
| Clint Capital | 93,500 | ||
| (To record admission of new partner Clint) | |||
| 2 | Cash | 90,000 | |
| Casey Capital | 90,000 | ||
| (To record capital introduced by Casey) |
Capital balances of each partner:
| Particulars | Hope | Indiana | Clint | Casey |
| Opening balances | $ 230,000 | $ 190,000 | $ - | $ - |
| Less: Interest Sold | $ (46,000) | $ (47,500) | ||
| Interest bought | $ 93,500 | |||
| Cash Contribution by Casey | $ 90,000 | |||
| Closing balances | $ 184,000 | $ 142,500 | $ 93,500 | $ 90,000 |
2)
| Original cost | $ 400,000 |
| Less:Accumulated depreciation | $ 340,000 |
| Carrying amount | $ 60,000 |
| Less: Sale proceeds | $ 40,000 |
| Loss on sale of equipment | $ 20,000 |
Loss on sale of equipment would be recognised in the Income statement as loss.
Under the indirect method of cash flow statement, the same($20,000) shall be added to the Net profit as its a non-cash expense/loss under the Cash flows from Operating activities. Sale proceeds of $40,000 shall be reported under Cash flows under Investing activities.
ekkarill92 answered 2 years agoRelated Solutions
Question 1 The capital accounts of Hope and Indiana have balances of $230,000 and $190,000, respectively....
Question 1 The capital accounts of Hope and Indiana have
balances of $230,000 and $190,000, respectively. Clint and Casey
are to be admitted to the partnership. Clint buys one-fifth of
Hope’s interest for $60,000 and one-fourth of Indiana’s interest
for $40,000. Casey contributes $90,000 cash to the partnership, for
which he is to receive an ownership equity of $90,000. Required: a.
Journalize the entries to record the admission of Clint and Casey
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