Question
In: Accounting
Assume that Partners A and B each report a Capital Account of $650,000. Partner C wants...
Assume that Partners A and B each report a Capital Account of $650,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been very profitable, Partners A and B require Partner C to contribute $1,400,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to the admission of Partner C. After admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 30% profit-allocation interest.
Required A: Use the Bonus Method to record the journal entry on the books of the partnership to reflect the admission of Partner C.
Required B: Compute the new Capital Accounts and the new profit-sharing ratio for Partners A, B, and C following the admission of Partner C into the partnership.
Required C: Assume that the partners believe that the payment by Partner C provides evidence of a previously unrecorded intangible asset in the partnership and the partners wish to record the intangible on the post-realignment partnership balance sheet. Use the Goodwill Method to record the journal entry on the books of the partnership to reflect the admission of Partner C.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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
...
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 assets is Section 704(c)
property. The partnership has the following balance sheet:
Assets
Liabilities and Partners’ Capital
A.B.
F.M.V.
A.B.*
F.M.V.
Cash
$13,000
$12,000
Liabilities:
$2,000
Capital
Assets:
Capital:
Collectibles
1,000
3,000
A
$10,000
15,000
Other
6,000
2,000
B
10,000
15,000
Subtotal
7,000
5,000
Receivables
0
14,000 ...
1. . A, B, and C are partners. Each originally contributed $5,000 to the partnership. If,...
1. . A, B, and C are partners. Each originally contributed
$5,000 to the partnership. If, after dissolution and liquidation,
the firm's assets are $100,000 and its debts to creditors are
$40,000, how much will be C's share of the assets if according to
the partnership contract they are to be divided equally among the
partners? Explain.
2. Without authority from his co-partners B and C, and in breach
of their partnership agreement, A assigns a truck owned by the...
Partners A, B, C and D each contribute $100,000 for 25% of the ABCD partnership. The...
Partners A, B, C and D each contribute $100,000 for 25% of the ABCD
partnership.
The
partners all meet the three tests for economic effect, and the four
tests for allocation of nonrecourse deductions are met as
well.
They use
the $400,000 cash and $3,600,000 of nonrecourse financing to buy a
building that is depreciable over 20 years on a straight line
basis.
Income
equals expenses in all years, except for depreciation,
which is allocated completely to D.
How much...
. ABC partners have capital balances and share profit and loss equally: A=$20,000, B=$15,000 and C...
. ABC partners have capital balances and share profit and loss
equally: A=$20,000, B=$15,000 and C = $65,000. During liquidation a
$75,000 loss on non cash assets is suffered. How much will C
eventually receive if:
A: All partners are solvent
B. B and C are solvent.
C. Only C is solvent. In this instance how much is C’s claim
against A & B each?
The ABC partnership has three partners, A, B, and C, who each has an equal interest...
The ABC partnership has three partners, A, B, and C, who each
has an equal interest in partnership capital, profits, and losses.
To pay off expenses incurred by the partnership, C contributed
additional capital on October 31 of the current year. As a result
of C's contribution, the partners' interests in the partnership
capital, profits, and losses changed to 25% for A, 25% for B, and
50% for C. The partnership is an accrual method, calendar year
taxpayer.
a) If...
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...
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
EZ-Tax is a tax accounting practice with partners and staff
members. Each billable hour of partner time has a $600 budgeted
price and $310 budgeted variable cost. Each billable hour of staff
time has a budgeted price of $130 and a budgeted variable cost of
$80. For the most recent year, the partnership budget called for
8,400 billable partner-hours and 35,650 staff-hours. Actual results
were as follows.
Partner revenue
$
4,650,000
7,900
hours
Staff revenue
$
4,580,000
35,000
hours
Required:...
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner...
EZ-Tax is a tax accounting practice with partners and staff
members. Each billable hour of partner time has a $550 budgeted
price and $270 budgeted variable cost. Each billable hour of staff
time has a budgeted price of $130 and a budgeted variable cost of
$60. For the most recent year, the partnership budget called for
8,700 billable partner-hours and 34,600 staff-hours. Actual results
were as follows:
Partner revenue
$
4,465,000
8,300
hours
Staff revenue
$
4,455,000
34,000
hours
Required:...
The Monroe Partnership has two partners – Amy and Claire. Each partner has a 50% interest...
The Monroe Partnership has two partners – Amy and Claire. Each
partner has a
50% interest in the partnership. Amy also owns 80% of the stock
(80 shares) of the
Zena Corporation. The other 20% (20 shares) of Zena are owned by
Wendy who is
not related to Amy or Claire. Based on these facts, the Monroe
partnership will be
deemed to own _____________ shares of Zena and Claire will be
deemed to own
___________ shares of Zena.
a. 80...
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