Complete the following practice exercise by recording your responses on the spreadsheet template. On July 1, three
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Question:
Complete the following practice exercise by recording your responses on the spreadsheet template.
- On July 1, three partners, H. Jones, Y. Read, and T. Kent, decided to start up a partnership by investing $20 000 each. Record the general journal entry to establish the partnership.
- L. Ong owns a boat rental business with $33 000 in cash and boats with a book value of
$120 000. She decides to enter a partnership with B. Cooper, who has only $2 000 cash but also owns lakefront docks and land with a book value of $370 000. After some friendly negotiations, they agree that the fair market value of the boats is $105 000; the docks have a fair market value of $20 000 and the land has a fair market value of $390 000. Record the general journal entry to establish the partnership on July 1. - On August 1, Joan Taylor and Tom Maid are partners in The Taylor Maid Company. They have capital balances of $30 000 and $20 000 respectively and have an income ratio of 60% and 40%. Record journal entries for each of the independent situations below about the admission of a new partner:
- Jim Zucher agrees to purchase half of Taylor's equity for $18 000.
- Barry Thompson agrees to purchase all of Maid's equity for $17 000.
- Gary Malley invests $5 000 cash and equipment with a fair market value of $9 000 in the business.
- On September 1, P. Duke, L. King and P. Prince are partners with an income ratio of 5:3:2 and $70 000, $45 000 and $28 000 in their capital accounts, respectively. They think that K. Knight would be a good fit to join their partnership. Record the entry of Knight under the following assumptions:
- Knight purchases 30% of King's equity for $20 000.
- Knight enters the partnership by investing $15 000 cash in the business.
- Mann, Haney and Young are partners. Haney, who has a capital balance of $140 000, has decided to retire. On February 1, Mann offers Haney $137 000 for his equity, and Haney accepts. Record the entry to record Haney's departure.
- Orr, Hamilton and Talbot are partners with capital balances of $50 000, $60 000 and $90 000, respectively. They have an income ratio of 3:4:5. On October 1, Orr decides to leave the partnership. Show the entry to record Orr's departure under the following assumptions:
- Hamilton and Talbot each pay $30 000 of their personal funds to Orr and receive 50% of his equity.
- Talbot pays $45 000 for all of Orr's equity.
- Haney, Koolen and Wallen are partners with capital balances of $140 000, $100 000 and
$90 000 respectively. They share all profits and losses equally. On October 1, the partners have decided to close down the business. They manage to liquidate all of the assets at a gain of
$60 000. Show the journal entry to allocate the gain to the partners and the entry to dissolve the business assuming a cash balance of $390,000 after the disposal of the assets. - Chura, Palmer and Priamo are partners with technology consulting business. They have capital balances of $35 000, $25 000 and $12 000 respectively. They have an income ratio of 2:3:5. The partnership has the following assets and liabilities: Cash $20 000; Accounts Receivable $7 000; Computer Equipment $140 000; Accumulated Amortization – Computer Equipment $80 000; Note Payable $15 000. On December 1, the partners decide to liquidate the assets and close the partnership. They manage to collect all of the Accounts Receivable but could get only $10 000 for the computer equipment.
Related Book For
Experiencing MIS
ISBN: 978-0133153934
3rd Canadian Edition
Authors: David M. Kroenke, Andrew Gemino, Peter Tingling
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