Paragraph Allocation Based on Services, Capital, and Stated Ratios 5-Smith and Jones have a partnership apreement with the following conditions: Smith receives $15,000 and Jones receives $10,000 as annual salaries. Each partner is allowed an annual interest allowance of 5% on the beginning-of-year capital balance. Any remaining balance of income or loss is allocated equally. Net income for 2008 is $110,000 GENERAL JOURNAL DEBIT DESCRIPTION Palagliap Part II PARNERSHIP PROBLEMS (CHAPTER 16 ADVANCE ACCOUNTING BOOK) Sty! Initial Investment in a Partnership -Ashley and Becker each invest $40,000 cash in a new partnership DATE PR DEBIT DESCRIPTION Noncash Investments 2-C. Cola and R. Crown enter into a partnership C. cola R. Crown Fair Value Fair value Cash S - 53,000 Land (cost to c. cola, 55,000) 14,000 Building cost to c. cola, 530,000) 55,000 Inventory (cost to R. Crown, 528,000) 55.000 Total GENERAL JOURNAL PAGE 1 PR. DEBIT DATE DESCRIPTION CREDIT Sty! Palagliap Part II PARNERSHIP PROBLEMS (CHAPTER 16 ADVANCE ACCOUNTING BOOK) Initial Investment in a Partnership I-Ashley and Becker each invest $40,000 cash in a new partnership DATE PR DEBIT DESCRIPTION Noncash Investments 2-C. Cola and R. Crown enter into a partnership C. cola R. Crown Fair value Fair value Cash - S 8,000 Land (cost to C. Cola, 55,000) 14,000 Building cost to c Cola, 530,000 $5,000 inventory (cost to R. Crown, 528,000) 55.000 Total GENERAL JOURNAL PAGE DEBIT DESCRIPTION Allocation Based on Stated Ratios 3- Smith and Jones agree to divide profits or losses for Smith and % for Jones. For 2008, the partnership reported net income of $80,000. GENERAL JOURNAL PAGE 1 DATE PR. DEBIT DESCRIPTION CREDIT Allocation Based on Capital Balances Smith, Capital Jones, Capital Totals Balance $ 80,000 40.000 $120,000 Ratio 66.67% 33.33% 100.00% Income $ 60,000 60,000 Allocation 40.000 20.000 $ 60,000 GENERAL JOURNAL PAGE 1 DATE DEBIT DESCRIPTION CREDIT Allocation Based on Services, Capital, and Stated Ratios 4-Smith and Jones have a partnership agreement with the following conditions: Smith receives $25,000 and Jones receives $8,000 as annual salaries. Each partner is allowed an annual interest allowance of 8% on the beginning-of-year capital balance. Any remaining balance of income or loss is allocated equally. Net income for 2008 is $90,000. GENERAL JOURNAL PAGE DATE DEBIT DESCRIPTION CREDIT