BEFORE you start on a project, you must first clearly understand the accounting topic involved. To review this topic, you will need to completely work through the "Accounting Notes" given in "Content", then check your answers against the "Accounting Answers" given in "Content." Partnerships are covered in some, but not all, accounting principles textbooks, usually in an appendix.

Use the "Answers" sheet in your workbook only to type in the answers to any questions given in the project (those questions that begin "Question to answer (on "Answers" worksheet).") Nothing else needs to go on this "Answers" sheet!

Upon completing this project, you will submit your workbook to Mrs. Wagers via "dropbox". You do not have to turn in any printouts.

Please carefully review the grading procedures for the projects. They were explained at orientation and are also given in your empty project workbook.

Yoda and Jabba recently joined together to form "Star Wars Master Trainers Partnership," which will provide extensive personal training to potential Jedis. Yoda invested $90,000 cash, while Jabba invested $48,000 of equipment and $12,000 cash. The partners are trying to decide on a fair way of splitting up the anticipated partnership net income. They have asked you to develop a worksheet to allow them to see how much net income will be allocated to each partner as assumptions change regarding partnership net income, interest allowances, salary allowances, and splits of any "remainders."

Open your Excel "Project" workbook (that was emailed to you) and save it as "(your last name) Project 1 Partnership" (so my workbook would be named Wagers Project 1 Partnership.)

Be sure to work through the "accounting notes" for this project to understand the accounting issues involved.

First, there a few questions to answer regarding partnerships, to help Yoda and Jabba better understand this form of organization.Enter your answers to these questions on the "Answers" worksheet in your workbook:

A. Question to answer (on "Answers" worksheet): List at least two factors that Yoda and Jabba should consider when deciding how much of the partnership net income should be allocated to each of the partners. Use common senseand think about the two major things a partner could contribute to the business!! (Reminder: type your answers to any "Questions to answer" on the "Answers" page of your workbook!)

B. Question to answer (on "Answers" worksheet): What is the major drawback of the partnership form of organization? Hint: it has to do with liability!

C. Question to answer (on "Answers" worksheet): What is meant by the term "mutual agency?" Why is this a major concern to a partner in a partnership?

D. Question to answer (on "Answers" worksheet): Identify at least three items that should be included in a partnership agreement. Do NOT include in your answer interest allowance, salary allowance, or allocation of remainder.

Now it is time to create the worksheet that Yoda and Jabba need to help them allocate the partnership net income between the two of them.

Rename Sheet1 to INCOME ALLOCATION.

The following information is considered to be "variable" data(i.e., it can changeas assumptions about the problem change.) Therefore, since this information is subject to change, these numbers should NOT be typed into formulas, but should instead be entered into a Assumptions (Data) Section at the top of the worksheet (hint: use formatting commands to make the numbers appear on your worksheet in the same format as they appear on the next page!)

Net Income $333,000

Interest Allowance on Original Investment 8%

Original Investments of Capital

Yoda ??? (figure this number,

Jabba ??? based on info on

top of previous page!)

Salary Allowances

Yoda $59,000

Jabba $21,000

Allocation of "remainder" of net income

Yoda 62%

Jabba 38%

Delete any unused rows from the Assumptions (Data) Section.

Turn the fill color of each "data" cell pale yellow to emphasize to users exactly where they should be entering data. Any numbers that they should type in go in these yellow cells only!!

Next, develop a Calculations (Answer) Section where you show (in good form, as below) how much of the net income will be allocated to each partner. The Calcuations Section should consist of FORMULAS ONLY - no numbers should be typed into this section.

Allocation Yoda Jabba Total

Salary Allowance $ X,XXX $ X,XXX $ X,XXX

Interest Allowance X,XXX X,XXX X,XXX

Subtotal $ X,XXX $ X,XXX $ X,XXX

Remainder X,XXX X,XXX X,XXX

Total $X,XXX $ X.XXX $ X,XXX

Format this calculations (answer) section just like the example above, using dollar signs on the appropriate cells (every other row), commas on cells in the two "in-between" rows that don't have dollar signs, single and double-underlines per above. Have no decimal places on any numbers.

If the TOTAL (not the remainder, but the total) allocated to either partner is greater than $60,000, the background color of the cell should automatically appear in "green fill with dark green text" (hint: conditional formatting!)

1. Question to answer (on "Answers" worksheet): Record the journal entry that is required to allocate the partnership net income between Yoda and Jabba.

1. Prepare a "2-D stacked column" chart using "Layout 4" that will show the interest allowances and salary allowances (but no totals) for Yoda and Jabba. There should be one column for Yoda and another column for Jabba. Hint: if you get one column for salary allowance and another for interest allowance, then click the "switch rows/columns" button. Be sure your chart includes:

• a legend (but if it says "Series 1," "Series 2," etc. - it is not correct!)
• "words" on the horizontal axis (but not just numbers 1, 2, 3, etc.!)
• a chart title (clear and explanatory - not just the name of the project!!)
• centered data labels showing the amounts
• titles on both axes
• dollar signs (no decimal places) on the vertical axis (hint: be sure the vertical axis is turned on!)

Here is an important hint: creating a chart will always be easier if you do not have any blank rows/columns separating the values to be charted and any words that are to appear in your chart.So, for example, if you have the words "Salary Allowance", "Interest Allowance", etc. in column A, then have your formulas for these items be in column B (in other words, don't leave column B blank and then enter your formulas into column C instead. If you skip any columns, your charting process will be more complex!)

Hint: do not type in "words" for the "names" of the legend entries series nor for the horizontal axis labels, but instead select the worksheet cells that contain these words. This way, if the "words" on the worksheet were to change, they will automatically change on the chart also.

Place your chart in on the INCOME ALLOCATION sheet below your Calculations (Answer) Section. Print your INCOME ALLOCATION worksheet, including the chart, being sure that it automatically fits on one page.

1. Oh, no.Yoda and Jabba have changed their estimates (assumptions) and instead anticipate that:

• the partnership net income will be $6,000.
• interest allowances of 12% are to be allowed on invested capital (salary allowances are unchanged),
• the remainder is to be allocated 90% to Yoda and 10% to Jabba.

Copy the INCOME ALLOCATION sheet to a new sheet (point to the sheet tab, right-click, select "Move or Copy," click "Create a Copy"), and then rename the new sheet REVISED ALLOCATION.)

Enter this new data into the yellow cells in the Assumptions (Data) Section only of your new worksheet (if you properly prepared your original worksheet, then no formulas should need to be changed - just numbers in the Assumptions Section.)

1. Question to answer (on "Answers" worksheet): Record the journal entry that is required to allocate the partnership net income between Yoda and Jabba, using the assumptions in "H" above. Hint: you can never have a negative number in a journal entry!!! You may want to look at the examples in the accounting notes to see how to handle any negative numbers!

1. Delete any unused worksheets.

A few things to double-check before you turn in your project - be sure that:

• you have two worksheets - one named INCOME ALLOCATION and another named REVISED ALLOCATION

• the Data Section on the worksheets is clearly separate from the Answer Section

• the final total (the far right column bottom-line total) agrees with the amount of net income that was to be allocated

• the Calculations (Answer) Section has the appropriate formatting as specified in the instructions

• press Control ~ (this is the tilde mark) to see what is entered into each cell. Be sure that you have no numbers typed into the Calculations (Answer) Section.Also, be sure you have no formulas typed into the Data Section.

• the cells containing the total allocated to each partner will automatically change to the appropriate green formatting when the cell shows an amount greater than $60,000

• questions A, B, C, D, E, H are answered on the "Answers" sheet

• the journal entries in E and H agree with the numbers on the worksheets and also that these journal entries balance and don't have any negative numbers

• the chart is a 2-D stacked column chart (consisting of two columns - one for Jabba and one for Yoda), has a good legend (i.e., no "series 1, series 2, etc"), has "words" on the primary vertical axis, has a clearly understandable chart title, has titles on both axes, has centered data labels, and is on the INCOME ALLOCATION sheet.