On January 1, FRED and GEMMO formed a partnership by contributing cash of P405,000 and P270,000,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On January 1, FRED and GEMMO formed a partnership by contributing cash of P405,000 and P270,000, respectively. On February 1. Fred contributed an additional P135,000. On May 1, Gemmo contributed machinery with a fair market value of P90,000 and a net book value/cost of P75,000 when contributed. On November 1 Gemmo contributed an additional P45,000 cash to the partnership. Profit or loss agreement are as follows: • Interest at 6% is allowed on average capital balances; • Salaries of P2,700 per month to each partner; • Bonus to Fred of 10% of net income; and • Balance to be divided in the ratio of 6:4 to Fred and Gemmo, respectively. ASSUMPTIONS: 1. The company had a revenue of 458,300 and expenses of 227, 900 resulting in a profit of 257,400. 2. The company had a revenue of 227, 900 and expenses of 458,300 resulting in a loss of 257,400. 3. The company had a revenue of 458,300 and expenses of 406,325 resulting in a profit of 51,975. Required: 1. Table showing the computation of average capital balances of each partner. 2. Journal Entries to record a. Entry upon formation b. Additional investments 3. Schedule/Table showing distribution of Net Income for EACH ASSUMPTION. 4. Journal Entry to record for EACH ASSUMPTION: a. NET Income/ NET Loss; and b. Distribution of Net Income On January 1, FRED and GEMMO formed a partnership by contributing cash of P405,000 and P270,000, respectively. On February 1. Fred contributed an additional P135,000. On May 1, Gemmo contributed machinery with a fair market value of P90,000 and a net book value/cost of P75,000 when contributed. On November 1 Gemmo contributed an additional P45,000 cash to the partnership. Profit or loss agreement are as follows: • Interest at 6% is allowed on average capital balances; • Salaries of P2,700 per month to each partner; • Bonus to Fred of 10% of net income; and • Balance to be divided in the ratio of 6:4 to Fred and Gemmo, respectively. ASSUMPTIONS: 1. The company had a revenue of 458,300 and expenses of 227, 900 resulting in a profit of 257,400. 2. The company had a revenue of 227, 900 and expenses of 458,300 resulting in a loss of 257,400. 3. The company had a revenue of 458,300 and expenses of 406,325 resulting in a profit of 51,975. Required: 1. Table showing the computation of average capital balances of each partner. 2. Journal Entries to record a. Entry upon formation b. Additional investments 3. Schedule/Table showing distribution of Net Income for EACH ASSUMPTION. 4. Journal Entry to record for EACH ASSUMPTION: a. NET Income/ NET Loss; and b. Distribution of Net Income
Expert Answer:
Answer rating: 100% (QA)
1 Table Showing Average Capital Balances FRED Average Capital is calculated based on the amount the Money was invested Divided by the Total Months In ... View the full answer
Related Book For
Taxation for Decision Makers 2014
ISBN: 9781118654545
6th edition
Authors: Shirley Dennis Escoffier, Karen Fortin
Posted Date:
Students also viewed these accounting questions
-
An individual contributes property with a fair market value in excess of basis to a corporation in exchange for stock. What is the basis of the stock in the hands of the shareholder, and what is the...
-
X, Y, and Z form XYZ Partnership by contributing cash and property as follows: X contributes $40,000 cash for a 20 percent interest. Y contributes property valued at $80,000 for a 40 percent...
-
Mr. Raven acquired 50% interest in a partnership by contributing a building that had a FMV of $12,000 and an adjusted basis of $10,000. The building was subject to a liability of $6,000, which the...
-
List and describe the payment options (terms of sale) that can be applied to domestic U.S. shipments.
-
Refer to Exercise 6-7. Using the same figures, assume that the sales were upstream instead of downstream. Required: Prepare the workpaper entries necessary to eliminate the effects of the...
-
Provide one brief example of an opportunity cost.
-
A process has streams to be heated and cooled above its pinch temperatures as illustrated in Figure 11.62. Complete a design that satisfies MER targets with the minimum number of heat exchangers....
-
Horse Country Living publishes a monthly magazine for which a 12-month subscription costs $30. All subscriptions require payment of the full $30 in advance. On August 1, 2010, the balance in the...
-
The Shirt Works sells a large variety of tee shirts and sweatshirts. Steve Hooper, the owner, is thinking of expanding his sales by hiring high school students, on a commission basis, to sell...
-
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:...
-
Find the 3 first moments (t > 0) for which: (a) x = 0 (b)vx=0.5 v max (max is the maximum speed) x = A cos (1.05t +3.67)
-
Portage Bay Enterprises has $2 million in excess cash, no debt, and is expected to have free cash flow of $12 million next year. Its FCF is then expected to grow at a rate of 6% per year forever. If...
-
The present value of JECK Co.s expected free cash flows is $110 million. If JECK has $27 million in debt, $8 million in cash, and 2.4 million shares outstanding, what is its share price?
-
Assume the annual return for the lowest turnover portfolio is 19% and the annual return for the highest turnover portfolio is 11%. If you invest $107,000 and have the highest turnover, how much lower...
-
You have a $101,000 portfolio made up of 15 stocks. You trade each stock five times this year and each time you trade, you pay about $35 in commissions and spread. You have no special knowledge, so...
-
Roybus, Inc., a manufacturer of flash memory, just reported that its main production facility in Taiwan was destroyed in a fire. Although the plant was fully insured, the loss of production will...
-
You purchase 10 call option contracts with a strike price of$83.58 and an option premium of $4.34. The stock is currentlytrading for $93.87 a share. What will your return be if youexercise your opt 2...
-
What is an access control list?
-
Your client, Teresa, claimed a dependency exemption for her elderly father. Upon audit, the IRS agent disallowed the dependency exemption. Teresa received a 30-day letter notifying her of the...
-
Joshua loans his son, Seth, $100,000 interest free for five years. Seth uses the money for a down payment on his home. Assume that the applicable federal rate of interest is 4 percent. a. What are...
-
Jeff, a single individual, receives $5,000 interest income from Treasury bills and $18,000 in Social Security benefits. What is Jeff's gross income?
-
Refer to Example 7, Chapter 10, where 48 of 60 transceivers passed inspection. (a) Obtain the maximum likelihood estimate of the probability that a transceiver will pass inspection. (b) Obtain the...
-
The daily number of accidental disconnects with a server follows a Poisson distribution. On five days \[\begin{array}{lllll}2 & 5 & 3 & 3 & 7\end{array}\] accidental disconnects are observed. (a)...
-
In one area along the interstate, the number of dropped wireless phone connections per call follows a Poisson distribution. From four calls, the number of dropped connections is...
Study smarter with the SolutionInn App