Question

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 1 year ago
Next > < Previous

Related 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 b. What are the capital balances of each...
Calculator The capital accounts of Heidi and Moss have balances of $90,000 and $65,000, respectively, on...
Calculator The capital accounts of Heidi and Moss have balances of $90,000 and $65,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Heidi invested an additional $8,000. During the year, Heidi and Moss withdrew $40,000 and $32,000, respectively. Revenues were $540,000 and expenses were $420,000 for the year. The articles of partnership make no reference to the division of net income. Required: 1. Prepare a statement of partners' equity for the partnership of Heidi...
13. The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on...
13. The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Harrison invested an additional $20,000. During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year was $264,000. The articles of partnership make no reference to the division of net income. Based on this information, the statement of partners' equity would show what amount as total...
The capital accounts of Trent Henry and Tim Chou have balances of $142,900 and $85,800, respectively....
The capital accounts of Trent Henry and Tim Chou have balances of $142,900 and $85,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $31,400 and one-fourth of Chou’s interest for $20,200. Clarke contributes $74,500 cash to the partnership, for which she is to receive an ownership equity of $74,500. Required: a. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer...
The capital accounts of Angel Alvarez and Emma Allison have balances of $47,740 and $71,570, respectively,...
The capital accounts of Angel Alvarez and Emma Allison have balances of $47,740 and $71,570, respectively, on January 1, 20Y4, the beginning of the fiscal year. On March 10, Alvarez invested an additional $7,690. During the year, Alvarez and Allison withdrew $31,410 and $39,630, respectively, and net income for the year was $62,000. Revenues were $483,000, and expenses were $421,000. The articles of partnership make no reference to the division of net income. Required: A. Journalize the entries to close...
The capital accounts of Trent Henry and Tim Chou have balances of $146,000 and $93,800, respectively....
The capital accounts of Trent Henry and Tim Chou have balances of $146,000 and $93,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $29,100 and one-fourth of Chou’s interest for $21,300. Clarke contributes $69,400 cash to the partnership, for which she is to receive an ownership equity of $69,400. Required: A. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer...
The capital accounts of Angel Alvarez and Emma Allison have balances of $47,740 and $71,570, respectively,...
The capital accounts of Angel Alvarez and Emma Allison have balances of $47,740 and $71,570, respectively, on January 1, 20Y4, the beginning of the fiscal year. On March 10, Alvarez invested an additional $7,690. During the year, Alvarez and Allison withdrew $31,410 and $39,630, respectively, and net income for the year was $62,000. Revenues were $483,000, and expenses were $421,000. The articles of partnership make no reference to the division of net income. Required: A. Journalize the entries to close...
The capital accounts of Robert Jewell and Donald Kane have balances of $60,000 and $80,000 respectively....
The capital accounts of Robert Jewell and Donald Kane have balances of $60,000 and $80,000 respectively. James Abbey and George Bowman are to be admitted to the partnership. Abbey purchases one-third of Jewell's interest for $25,000 and one-fifth of Kane's interest for $20,000. Bowman contributes $40,000 cash to the partnership, for which he is to receive an ownership equity of $40,000. INSTRUCTIONS: (a) Present the entries in general journal form to record the admission to the partnership of (1) Abbey...
McGill and Smyth have capital balances on January 1 of $40,000 and $30,000, respectively. The partnership...
McGill and Smyth have capital balances on January 1 of $40,000 and $30,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $15,000 for McGill and $10,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by McGill and 40% by Smyth. Prepare a schedule showing the distribution of net income, assuming net income is $65,000. (If an amount reduces the account balance then enter with a...
McGill and Smyth have capital balances on January 1 of $48,000 and $30,000, respectively. The partnership...
McGill and Smyth have capital balances on January 1 of $48,000 and $30,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $22,000 for McGill and $18,000 for Smyth, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 70% by McGill and 30% by Smyth. (1) Prepare a schedule showing the distribution of net income, assuming net income is $71,000 (2) Prepare a schedule showing the distribution of net income,...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT