Pelosi, Trump and Schiff are partners in the PST partnership. On January 1, 2020 the capital...

  

Transcribed Image Text:

Pelosi, Trump and Schiff are partners in the PST partnership. On January 1, 2020 the capital accounts for the partners are as follows: Pelosi $100,000 Schiff $200,000 Trump $300,000 Trump is a 50% partner; Schiff is a 30% partner and Pelosi is a 20% partner. On January 2nd Biden wants to join the partnership as a 25% partner. Biden will be contributing $400,000 into the partnership. REQUIRED: A) MAKE THE PARTNERSHIP JOURNAL ENTRY IF THE PARTNERSHIP USES THE BONUS METHOD B) MAKE THE PARTNERSHIP JOURNAL ENTRY IF THE PARTNERSHIP USES THE GOODWILL METHOD. It is January 1st 2023 and the partnership of Pelosi, Schiff, Trump and Biden (PSTB) has the following capital accounts 15% Pelosi $100,000 20% Schiff $200,000 40% Trump $500,000 25% Biden $500,000 Partners receive interest on their beginning of the year capital account of 10%. Trump receives an annual salary of $80,000; Pelosi receives an annual salary of $30,000 Every year Trump withdraws $40,000 for hair dye and Biden withdraws $25,000 for hair implants In 2023 the partnership reported income of $300,000 In 2024 the partnership reported income of $340,000 In 2025 the partnership reported income of $250,000 before partner salaries or partner interest before partner salaries or partner interest before partner salaries or partner interest REQUIRED: FOR 2023, 2024 AND 2025 DETERMINE; a) the distribution of income to each partner b) each partner's ending capital account (December 31st) It is now 2027 and sadly, the PSTB partnership is ending! On January 1st the partnership had the following balance sheet: Cash 100,000 accounts payabli 900,000 accounts receiva 200,000 Pelosi Capital Schiff Capital equipment (net) 200,000 50,000 land 700,000 250,000 building (net) 500,000 Trump Capital Biden Capital 450,000 50,000 total assets 1,700,000 REMEMBER: TRUMPIS A 40% PARTNER; PELOSI 15% PARTNER SCHIFF 20% PARTNERAND BIDEN 25% PARTNER. A)On January 1st what amount safe payments can each partner take? B) On January 28th the partnership sells the receivables for $70,000. On January 29th What safe payments can each partner take (note: no partner has taken any safe payments) C) On February 13th the partnership sold the equipment for $190,000. On February 14th what safe payments can each partner take (note: no partner has taken any safe payments) D) On March 5th the partnership sells the land for $710,000 and pay off the accounts payables On March 6th what safe payments can each partner take (note: no partner has taken any safe payments) E) On April 3rd, the partnership sells the building for $370,000. No partners have taken any safe payments E1) If any partner is insolvent, they CANNOT cover their shortages, how much does each partner receive? E2) If any partner is insolvent, they CAN cover their shortages, how much does each partner receive? Pelosi, Trump and Schiff are partners in the PST partnership. On January 1, 2020 the capital accounts for the partners are as follows: Pelosi $100,000 Schiff $200,000 Trump $300,000 Trump is a 50% partner; Schiff is a 30% partner and Pelosi is a 20% partner. On January 2nd Biden wants to join the partnership as a 25% partner. Biden will be contributing $400,000 into the partnership. REQUIRED: A) MAKE THE PARTNERSHIP JOURNAL ENTRY IF THE PARTNERSHIP USES THE BONUS METHOD B) MAKE THE PARTNERSHIP JOURNAL ENTRY IF THE PARTNERSHIP USES THE GOODWILL METHOD. It is January 1st 2023 and the partnership of Pelosi, Schiff, Trump and Biden (PSTB) has the following capital accounts 15% Pelosi $100,000 20% Schiff $200,000 40% Trump $500,000 25% Biden $500,000 Partners receive interest on their beginning of the year capital account of 10%. Trump receives an annual salary of $80,000; Pelosi receives an annual salary of $30,000 Every year Trump withdraws $40,000 for hair dye and Biden withdraws $25,000 for hair implants In 2023 the partnership reported income of $300,000 In 2024 the partnership reported income of $340,000 In 2025 the partnership reported income of $250,000 before partner salaries or partner interest before partner salaries or partner interest before partner salaries or partner interest REQUIRED: FOR 2023, 2024 AND 2025 DETERMINE; a) the distribution of income to each partner b) each partner's ending capital account (December 31st) It is now 2027 and sadly, the PSTB partnership is ending! On January 1st the partnership had the following balance sheet: Cash 100,000 accounts payabli 900,000 accounts receiva 200,000 Pelosi Capital Schiff Capital equipment (net) 200,000 50,000 land 700,000 250,000 building (net) 500,000 Trump Capital Biden Capital 450,000 50,000 total assets 1,700,000 REMEMBER: TRUMPIS A 40% PARTNER; PELOSI 15% PARTNER SCHIFF 20% PARTNERAND BIDEN 25% PARTNER. A)On January 1st what amount safe payments can each partner take? B) On January 28th the partnership sells the receivables for $70,000. On January 29th What safe payments can each partner take (note: no partner has taken any safe payments) C) On February 13th the partnership sold the equipment for $190,000. On February 14th what safe payments can each partner take (note: no partner has taken any safe payments) D) On March 5th the partnership sells the land for $710,000 and pay off the accounts payables On March 6th what safe payments can each partner take (note: no partner has taken any safe payments) E) On April 3rd, the partnership sells the building for $370,000. No partners have taken any safe payments E1) If any partner is insolvent, they CANNOT cover their shortages, how much does each partner receive? E2) If any partner is insolvent, they CAN cover their shortages, how much does each partner receive?

Answer rating: 100% (QA)

Journal entry 2 A BONUS METHOD Calculation 3 Step 1 Total capital of existing partners Investment ... View the full answer