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Accounting 23rd Edition Carl S. Warren - Solutions
=+EX 12-5 Dividing partnership net loss obj. 2 Sixty-year-old Jasmine Howard retired from her computer consulting business in Boston and moved to Florida. There she met 27-year-old Dawn Patel, who had just graduated from Eldon Community College with an associate degree in computer science. Jasmine
=+EX 12-4 Dividing partnership income obj. 2✔c. Hassell,$168,800 Casey Fisher and Logan Baylor formed a partnership in which the partnership agreement provided for salary allowances of $40,000 and $35,000, respectively. Determine the division of a $20,000 net loss for the current year.
=+EX 12-3 Dividing partnership income obj. 2✔b. Hassell,$150,000 Determine the income participation of Hassell and Lawson, according to each of the five assumptions as to income division listed in Exercise 12-3 if the year’s net income is$380,000.
=+EX 12-2 Record partner’s original investment obj. 2 560 Chapter 12 Accounting for Partnerships and Limited Liability Companies Chapter 12 Accounting for Partnerships and Limited Liability Companies 561 Candace Hassell and Abby Lawson formed a partnership, investing $240,000 and$80,000,
=+Brandi Bonds and Cesar Ruiz form a partnership by combining assets of their former businesses. The following balance sheet information is provided by Bonds, sole proprietorship:Cash $ 40,000 Accounts receivable $75,000 Less: Allowance for doubtful accounts 4,100 70,900 _______ Land 180,000
=+15. How is the statement of members’ equity similar to the statement of partners’ equity?
=+13. Why might a partnership pay a bonus to a newly admitted partner?
=+c. At the end of the fiscal year, what accounts are debited and credited to record the division of net income among partners?
=+b. The articles of partnership provide for a salary allowance of $6,000 per month to partner C. If C withdrew only $4,000 per month, would this affect the division of the partnership net income?
=+10.a. What accounts are debited and credited to record a partner’s cash withdrawal in lieu of salary?
=+How should the accounts receivable be recorded in the general ledger of the partnership?
=+8. All partners agree that $150,000 of accounts receivable invested by a partner will be collectible to the extent of 90%.
=+How much of the cash of $12,000 would be distributed to Pavin?A. $2,000 C. $10,000 B. $8,000 D. $12,000
=+5. Pavin and Abdel share gains and losses in the ratio of 2:1. After selling all assets for cash, dividing the losses on realization, and paying liabilities, the balances in the capital accounts were as follows: Pavin, $10,000 Cr.; Abdel, $2,000 Cr.
=+4. Lee and Stills are partners who share income in the ratio of 2:1 and who have capital balances of$65,000 and $35,000, respectively. If Morr, with the consent of Stills, acquired one-half of Lee’s interest for $40,000, for what amount would Morr’s capital account be credited?A. $32,500 C.
=+What would be Tracey’s share of a net income of$45,000?A. $22,500 C. $19,000 B. $22,000 D. $10,000
=+3. Tracey and Hepburn invest $100,000 and$50,000, respectively, in a partnership and agree to a division of net income that provides for an allowance of interest at 10% on original investments, salary allowances of $12,000 and $24,000, respectively, with the remainder divided equally.
=+2. Chip and Dale agree to form a partnership. Chip is to contribute $50,000 in assets and to devote one-half time to the partnership. Dale is to contribute $20,000 and to devote full time to the partnership. How will Chip and Dale share in the division of net income or net loss?A. 5:2 C. 1:1 B.
=+1. As part of the initial investment, a partner contributes office equipment that had cost $20,000 and on which accumulated depreciation of$12,500 had been recorded. If the partners agree on a valuation of $9,000 for the equipment, what amount should be debited to the office equipment
=+2. Journalize the entries to record (a) the sale of the assets, (b) the division of loss on the sale of the assets, (c) the payment of the liabilities, (d) the receipt of the deficiency, and (e) the distribution of cash to the partners
=+1. Assuming that the partner with the capital deficiency pays the entire amount owed to the partnership, prepare a statement of partnership liquidation.
=+Between May 1 and May 18, the noncash assets were sold for $27,400, and the liabilities were paid.Instructions
=+Balances before realization Sale of assets and division of loss Balances after realization Payment of liabilities Balances after payment of liabilities Receipt of deficiency Balances Cash distributed to partners Final balances Capital( )( )2. a.27,400 82,500 109,900 Cash Loss on Realization
=+Radcliffe, Sonders, and Towers, who share in income and losses in the ratio of 2:3:5, decided to discontinue operations as of April 30, 2010, and liquidate their partnership.After the accounts were closed on April 30, 2010, the following trial balance was prepared:Cash Liabilities Noncash Assets
=+d. A count of the cash on hand on June 30 totaled $3,600. Briefly discuss the possible causes of the difference between the amount of cash computed in (c) and the actual amount of cash on hand.
=+c. Based on Cody’s records of receipts and payments, calculate the amount of cash on hand on June 30. For this purpose, a T account for cash may be useful.
=+b. Prepare an income statement for June in order to help Cody assess the profitability of Ace Caddy Service. For this purpose, the use of T accounts may be helpful in analyzing the effects of each June transaction.
=+a. To assist Cody with his record keeping, prepare a chart of accounts that would be appropriate for Ace Caddy Service.
=+30. Determined the amount of supplies on hand at the end of June, $425.Cody has asked you several questions concerning his financial affairs to date, and he has asked you to assist with his record keeping and reporting of financial data.
=+30. Received cash for services from June 16–30, $2,650.30. Paid telephone and electricity (utilities) expenses, $140.30. Paid wages of part-time employees, $450.30. Received cash in payment of IOUs on account, $800.
=+25. Accepted IOUs from customers on account, $1,200.28. Paid miscellaneous expenses, $150.
=+SA 2-6 Opportunities for accountants Internet Project June 22. Purchased supplies, including gasoline, on account, $400.
=+2. Print a listing of at least two ads for nonaccounting jobs for which some knowledge of accounting is preferred or necessary. Alternatively, bring to class at least two newspaper ads for such jobs.
=+1. Print a listing of at least two ads for accounting jobs. Alternatively, bring to class at least two newspaper ads for accounting jobs.
=+The increasing complexity of the current business and regulatory environment has created an increased demand for accountants who can analyze business transactions and interpret their effects on the financial statements. In addition, a basic ability to analyze the effects of transactions is
=+5. D The trial balance (answer D) is a listing of the balances and the titles of the accounts in the ledger on a given date, so that the equality of the debits and credits in the ledger can be verified. The income statement (answer A) is a summary of revenue and expenses for a period of time. The
=+4. A The receipt of cash from customers on account increases the asset Cash and decreases the asset Accounts Receivable, as indicated by answer A. Answer B has the debit and credit reversed, and answers C and D involve transactions with creditors (accounts payable) and not customers (accounts
=+3. C Accounts Receivable (answer A),Cash (answer B), and Miscellaneous Expense (answer D) would all normally have debit balances. Fees Earned should normally have a credit balance. Hence, a debit balance in Fees Earned (answer C) would indicate a likely error in the recording process.
=+2. C Liability, capital, and revenue (answer C) accounts have normal credit balances.Asset (answer A), drawing (answer B), and expense (answer D)accounts have normal debit balances.
=+decrease in an asset account (answer B) or an increase in a liability or owner’s capital account(answers C and D).
=+What should Faye say to Steve?1. A A debit may signify an increase in an asset account (answer A) or a decrease in a liability or owner’s capital account. A credit may signify a
=+Faye: We need to have a talk.
=+SA 2-5 Transactions and income statement Steve: I’ve been thinking about our method of recording entries. It seems that it’s inefficient.Faye: In what way?Steve: Well—correct me if I’m wrong—it seems like we have unnecessary steps in the process. We could easily develop a trial balance
=+7. Purchased supplies, including gasoline, for the golf carts on account, $500.Hattiesburg Golf and Country Club has agreed to allow Cody to store the gasoline in one of its fuel tanks at no cost.15. Received cash for services from June 1–15, $2,350.17. Paid cash to creditors on account,
=+1. Paid rent to Hattiesburg Golf and Country Club, $600.2. Paid for golf supplies (practice balls, etc.), $750.3. Arranged for the rental of 25 regular (pulling) golf carts and 10 gasolinedriven carts for $2,000 per month. Paid $500 in advance, with the remaining$1,500 due June 20.
=+Cody keeps notes of all receipts and expenses in a shoe box. An examination of Cody’s shoe box records for June revealed the following:June 1. Withdrew $2,500 from personal bank account to be used to operate the caddy service.
=+SA 2-4 Debits and credits Group Project Cody Packwood is planning to manage and operate Ace Caddy Service at Hattiesburg Golf and Country Club during June through August 2010. Cody will rent a small maintenance building from the country club for $600 per month and will offer caddy services,
=+2. What information (other than just debit and credit journal entries) could the accounting system gather that might be useful to Barb in managing Teton Construction Company?
=+1. After listening to the conversation between Barb and Loyd, help Barb answer Loyd’s questions.
=+Barb: Well, I will if I can.Loyd: Okay, our instructor says that it’s critical we understand the basic concepts of accounting, or we’ll never get beyond the first test. My problem is with those rules of debit and credit . . . you know, assets increase with debits, decrease with credits,
=+SA 2-2 Account for revenue Chapter 2 Analyzing Transactions 97 The following excerpt is from a conversation between Barb Thiel, the president and chief operating officer of Teton Construction Company, and her neighbor, Loyd Crum.Loyd: Barb, I’m taking a course in night school, “Intro to
=+SA 2-3 Record transactions Roswell College requires students to pay tuition each term before classes begin. Students who have not paid their tuition are not allowed to enroll or to attend classes.What journal entry do you think Roswell College would use to record the receipt of the students’
=+SA 2-1 Ethics and professional conduct in business The following discussion took place between Faye Lucas, the office manager of Typhoon Data Company, and a new accountant, Steve Haack.
=+At the end of the current month, Hannah Kinsey prepared a trial balance for Seaside Rescue Service. The credit side of the trial balance exceeds the debit side by a significant amount. Hannah has decided to add the difference to the balance of the miscellaneous expense account in order to
=+4. Prepare an unadjusted trial balance as of July 31, 2010.
=+3. Post the journal to the ledger, extending the account balance to the appropriate balance column after each posting.
=+2. Analyze and journalize each transaction in a two-column journal, omitting journal entry explanations.
=+21 Accounts Payable 250 54 Music Expense 1,290 23 Unearned Revenue — 55 Advertising Expense 600 31 Lee Chang, Capital 8,000 56 Supplies Expense 180 32 Lee Chang, Drawing 200 59 Miscellaneous Expense 150
=+12 Accounts Receivable 1,350 50 Wages Expense 400 14 Supplies 170 51 Office Rent Expense 750 15 Prepaid Insurance — 52 Equipment Rent Expense 500 17 Office Equipment — 53 Utilities Expense 300
=+balances), are as follows:11 Cash $ 8,010 41 Fees Earned $5,650
=+31. Received $2,800 for serving as a disc jockey for a party.31. Paid $1,100 royalties (music expense) to National Music Clearing for use of various artists’ music during July.31. Withdrew $1,500 cash from Music Depot for personal use.Music Depot’s chart of accounts and the balance of
=+27. Paid electric bill, $560.28. Paid wages of $1,000 to receptionist and part-time assistant.29. Paid miscellaneous expenses, $150.30. Served as a disc jockey for a charity ball for $1,800. Received $400, with the remainder due on August 9, 2010.
=+23. Served as disc jockey for a party for $2,500. Received $750, with the remainder due August 4, 2010.
=+July 22. Paid $800 to a local radio station to advertise the services of Music Depot twice daily for the remainder of July.
=+1. Prepare a corrected unadjusted trial balance as of August 31, 2010.
=+j. Gas, Electricity, and Water Expense, with a balance of $12,075 was omitted from the trial balance.Instructions
=+g. A credit of $1,575 in Accounts Payable was overlooked when determining the balance of the account.h. A debit of $6,125 for a withdrawal by the owner was posted as a credit to Isaiah Betts, Capital.i. The balance of $12,600 in Advertising Expense was entered as $1,260 in the trial balance.
=+e. An insurance policy acquired at a cost of $300 was posted as a credit to Prepaid Insurance.f. The balance of Notes Payable was understated by $13,125.
=+d. A return of $350 of defective supplies was erroneously posted as a $530 credit to Supplies.
=+✔ 4. Total of Debit column: $38,680
=+21. Paid $420 to Upload Music for use of its current music demos in making various music sets.
=+v16. Received $1,750 for serving as a disc jockey for a wedding reception.18. Purchased supplies on account, $680.
=+13. Paid $600 to a local audio electronics store for rental of digital recording equipment.14. Paid wages of $1,000 to receptionist and part-time assistant.
=+8. Paid for a newspaper advertisement, $200.11. Received $800 for serving as a disc jockey for a party.
=+4. Paid an attorney $500 for reviewing the July 3rd contract with WHBD.(Record as Miscellaneous Expense.)5. Purchased office equipment on account from One-Stop Office Mart, $5,000.
=+3. On behalf of Music Depot, Lee signed a contract with a local radio station, WHBD, to provide guest spots for the next three months. The contract requires Music Depot to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600. Any additional hours beyond 80 will be billed
=+1. Instead of continuing to share office space with a local real estate agency, Lee decided to rent office space near a local music store. Paid rent for July,$2,000.1. Paid a premium of $2,700 for a comprehensive insurance policy covering liability, theft, and fire. The policy covers a one-year
=+✔ 1. Total of Debit column: $350,000 Chapter 2 Analyzing Transactions 95 The transactions completed by Music Depot during June 2010 were described at the end of Chapter 1. The following transactions were completed during July, the second month of the business’s operations:July 1. Lee Chang
=+PR 2-6B Corrected trial balance obj. 4
=+c. A debit of $2,250 to Accounts Receivable was not posted.
=+b. A cash receipt of $3,600 was posted as a debit to Cash of $6,300.
=+PR 2-5B Errors in trial balance obj. 4✔ 7. Total of Debit column: $43,338.10 Damascus Carpet has the following unadjusted trial balance as of August 31, 2010.Damascus Carpet Unadjusted Trial Balance August 31, 2010 Debit Credit Balances Balances Cash . . . . . . . . . . . . . . . . . . . . . .
=+6. Journalize as of May 31 the payment of $175 for advertising expense. The bill had been paid on May 31 but was inadvertently omitted from the journal. Post to the ledger. (Revise any amounts necessitated by posting this entry.)
=+4. Verify the accuracy of the balance of each account in the ledger, and list the errors in the space provided in the working papers.
=+If the working papers correlating with this textbook are not used, omit Problem 2-5B.The following records of Hallmark Electronic Repair are presented in the working papers:• Journal containing entries for the period May 1–31.• Ledger to which the May entries have been posted.•
=+PR 2-4B Journal entries and trial balance objs. 1, 2, 3, 4✔ 4. Total of Debit column: $264,640
=+4. Prepare an unadjusted trial balance of the ledger as of November 30, 2010.
=+2. Journalize the transactions for November in a two-column journal. Journal entry explanations may be omitted.
=+1. Record the November 1, 2010, balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark (✔) in the Posting Reference column.
=+30. Rented land purchased on November 15 to local merchants association for use as a parking lot in December and January, during a street rebuilding program; received advance payment of $2,000.Instructions
=+30. Withdrew cash for personal use, $1,000.
=+30. Paid salaries and commissions for the month, $13,500.
=+30. Recorded revenue earned and billed to clients during the month, $31,750.
=+28. Paid automobile expense (including rental charges for an automobile), $900.29. Paid miscellaneous expenses, $450.
=+20. Returned a portion of the office supplies purchased on November 2, receiving full credit for their cost, $200.23. Paid advertising expense, $1,250.27. Discovered an error in computing a commission; received cash from the salesperson for the overpayment, $400.
=+17. Paid creditors on account, $2,910.
=+Ampere Realty acts as an agent in buying, selling, renting, and managing real estate.The unadjusted trial balance on October 31, 2010, is shown below.Ampere Realty Unadjusted Trial Balance October 31, 2010 Debit Credit Balances Balances 11 Cash . . . . . . . . . . . . . . . . . . . . . . . . . .
=+3. Prepare an unadjusted trial balance as of August 31, 2010.
=+of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be omitted.11 Cash 31 Jose Guadalupe, Capital 12 Accounts Receivable 32 Jose Guadalupe, Drawing 13 Supplies 41 Fees Earned 14 Prepaid Insurance 51
=+30. Withdrew cash for personal use, $1,750.Instructions 1. Journalize each transaction in a two-column journal, referring to the following chart
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