Question
In: Accounting
Computing initial partner investments Car and Lam establish an equal partnership in both equity and profits...
Computing initial partner investments Car and Lam establish an equal partnership in both equity and profits to operate a used-furniture business under the name of C&L Furniture. Car contributes furniture inventory that cost $120,000 and has fair value of $160,000. Lam contributes $60,000 cash and delivery equipment that cost $80,000 and has a fair value of $60,000.
| Required: | |||||||||
| Assume that the initial noncash contributions of the partners are recorded at fair market value. Compute the | |||||||||
| ending balance of each capital account under the bonus and goodwill approaches. | |||||||||
Solutions
Expert Solution
Initial capital Investments
Car (at fair value) Lam (at fair value)
Inventory Items (Cost $120,000) $160,000 -
Cash Contribution - $60,000
Delivery Equipments (Cost $80,000) - $60,000
Total $160,000 $120,000
Partnership of Car and Lam (50%)
Journal Entry for Adjustments of capital
Car Capital Dr. $20,000
To Lam Capital $20,000
To establish equal capital interests i.e. $140,000, lam will bring the additional capital of $20,000
Statement showing Capital Balance of Partners after adjustments
Car Lam
Initial Capital Balance as calculated above $160,000 $120,000
Adjustment of Capital ($20,000) $20,000
Capital Balance after Adjustment $140,000 $140,000
ekkarill92 answered 1 year agoRelated Solutions
Diana, a partner in the cash basis HDA Partnership, has a one-third interest in partnership profits...
Diana, a partner in the cash basis HDA Partnership, has a
one-third interest in partnership profits and losses. The
partnership's balance sheet at the end of the current year is as
follows: Basis FMV Basis FMV Cash $120,000 $120,000 Hannah, capital
$90,000 $250,000 Receivables 0 240,000 Diana, capital 90,000
250,000 Land 150,000 390,000 Alexis, capital 90,000 250,000 Total
$270,000 $750,000 Total $270,000 $750,000 Diana sells her interest
in the HDA Partnership to Kenneth at the end of the current year...
A and B are equal partners in a personal services partnership. Each partner acquired her partnership...
A and B are equal partners in a personal services partnership.
Each partner acquired her partnership interest for cash several
years ago. None of the partnership’s asset sis Section 704(c)
property. The partnership has the following balances sheet:
Assets
Liabilities and Partnerships' Capital
A.B.
FMV
cash
13,000
13,000
Liabilities
2,000
capital
assets
Capital
A.B.
FMV
collectibles
1,000
3,000
A
10,000
15,000
Other
6,000
2,000
B
10,000
15,000
Subtotal
...
is a one-third general partner in the DEF partnership. Both D and the partnership are cash...
is a one-third general partner in the DEF partnership. Both D
and the partnership are cash method, calendar year taxpayers. D
dies at a time when the partnership has earned $15,000 for the
current year, and his share of the untaxed and undistributed
partnership income for the year is $5,000. Under all of the sale or
liquidation agreements described below, D is to be paid $30,000 for
his interest, which includes his share of income. Immediately prior
to D’s death,...
A (a cash method taxpayer) is an equal partner in the ABCD partnership (an accrual method...
A (a cash method taxpayer) is an equal partner in the ABCD
partnership (an accrual method taxpayer) and has a $10,000 outside
basis in her partnership interest. A owns depreciable personal
property (fair market value -- $15,000; fair rental value -- $1,000
per year) which the partnership will use in its business. Before
any of the transactions described below, the partnership has
$10,000 of net income each year. What result in the following
alternatives?
(a) A leases the property to...
In a partnership, a partner can contribute an initial investment, have a drawing account, and have...
In a partnership, a partner can contribute an initial
investment, have a drawing account, and have loans to the
partnership. Describe the accounting and reporting implications of
each of these partner transactions on the formation and reporting
of the partnership. Is providing a loan to a partnership on the
same level as the initial investment and ongoing profits and losses
by a partner? Why or why not?
In a partnership, a partner can contribute an initial investment, have a drawing account, and have...
In a partnership, a partner can contribute an initial
investment, have a drawing account, and have loans to the
partnership. Describe the accounting and reporting implications of
each of these partner transactions on the formation and reporting
of the partnership. Is providing a loan to a partnership on the
same level as the initial investment and ongoing profits and losses
by a partner? Why or why not?
Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property...
Luis and Jennifer formed the JL Partnership as equal partners.
Each partner contributed cash and property with a value of $80,000
for partnership operations. As a result of these contributions,
Luis had a basis of $80,000 and Jennifer a basis of $60,000 in
their partnership interests. At the end of their first year of
operations, they had the following results: Gross sales $110,000
Cost of goods sold 75,000 Rent expense 18,000 Employees’ salaries
20,000 Utilities 3,000 Charitable contribution 500 Section...
Describe equity investment and the risks of these investments for both the investor and the capital...
Describe equity investment and the risks of these investments
for both the investor and the capital structure.
Bob Short would devote more time to the partnership than would his equal partner Jack Long,...
Bob Short would devote more time to the partnership than would
his equal partner Jack Long, it was agreed that Bob would receive a
“salary” of $12,000 per year. Bob and Jack agreed to divide the
remaining partnership income equally. For the current year, prior
to consideration of Bob’s salary, the partnership income was
composed of $6,000 long-term capital gain, $2,000 tax-exempt
interest, and $8,000 loss from operations. Determine the amount and
character of income (loss) reportable by Bob and...
A and B, both calendar year noncorporate taxpayers, are equal partners in the AB partnership, which...
A and B, both calendar year noncorporate taxpayers, are equal
partners in the AB partnership, which
had the following income and expenses during its (business purpose)
taxable year that ended on July 31
of the current year:
Gross receipts from inventory sales $100,000
Cost of goods sold $30,000
Salaries paid to nonpartners $10,000
Depreciation $12,000
Advertising expenses $8,000
Interest expense paid on investment margin account
maintained by AB (see § 163(d)) $6,000
Gain from the sale of machine held for...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- A company produces three different type of chocolates. A, B, and C. The sales volume for...
- When considering labeling someone with a disorder it is important that we use the most up...
- 7. The director of career advising at Rutgers want to use decision analysis to provide...
- Looking for assistance with the "sketch/graph" part of the below question:Consider the following projects, X and...
- Please remember that this assignment must be posted in APA format with at least two scholarly...
- Emily and her friends sell newspaper ads for the Bronc to supplement their income each year....
- Choose one of the financial statements that were covered in this module: The Balance Sheet, The...
ADVERTISEMENT