REQUIRED: Prepare a schedule to allocate partnership net income of $28,000 for

AKL 1 2011.

SOAL LATIHAN 5. Partnership capital statement On December 31, 2011, the total partnership capital (assets
less liabilities) for the Bird, Cage, and Dean partnership is $186,000. Selected information
1. Car and Lam establish an equal partnership in both equity and profits to operate a used-
related to the preclosing capital balances as follows:
furniture business under the name of C&L Furniture. Car contributes furniture inventory
Bird Capital Cage Capital Dean Capital Total
that cost $120,000 and has fair value of $160,000. Lam contributes $60,000 cash and
Capital Balance January 1 $ 60,000 $ 45,000 $70,000 $175,000
delivery equipment that cost $80,000 and has a fair value of $60,000.
Investments 2011 10,000 10,000 20,000
REQUIRED: Assume that the initial noncash contributions of the partners are Withdrawals 2011 (15,000) (15,000) (30,000)
recorded at fair market value. Compute the ending balance of each capital account Drawings 2011 (5,000 ) (5,000 ) (5,000 ) (15,000 )
under the bonus and goodwill approaches. $ 40,000 $ 50,000 $60,000 $150,000

2. Arnold, Beverly, and Carolyn are partners who share profits and losses 40:40:20,
REQUIRED: Prepare a statement of partnership capital for the Bird, Cage, and
respectively, after Beverly, who man-ages the partnership, receives a bonus of 10 percent
Dean partnership at year-end 2011, assuming that no specific profit or loss sharing
of income, net of the bonus. Partnership income for the year is $198,000.
agreement exists.
REQUIRED: Prepare a schedule to allocate partnership income to Arnold, Beverly,
6. Capital balances and profit and loss sharing ratios of the partners in the BIG
and Carolyn.
Entertainment Galley are as follows:
3. Mel and Dav created a partnership to own and operate a health-food store. The
Ben capital (50%) $ 700,000
partnership agreement provided that Mel receive a salary of $10,000 and Dav a salary of
Irv capital (30%) 480,000
$5,000 to recognize their relative time spent in operating the store. Remaining profits and
Geo capital (20%) 300,000
losses were divided 60:40 to Mel and Dav, respectively. Income of $13,000 for 2011, the
Total $1,480,000
first year of operations, was allocated $8,800 to Mel and $4,200 to Dav.
Ben needs money and agrees to assign half of his interest in the partnership to Pet for
On January 1, 2012, the partnership agreement was changed to reflect the fact that Dav
$180,000 cash. Pet pays $180,000 directly to Ben.
could no longer devote any time to the store’s operations. The new agreement allows Mel a
salary of $18,000, and the remaining profits and losses are divided equally. In 2012 an REQUIRED
error was discovered such that the 2011 reported income was understated by $4,000. The 1. Prepare a journal entry to record the assignment of half of Ben’s interest in the
partnership income of $25,000 for 2012 included this $4,000 related to 2011. partnership to Pet.
2. What is the total capital of the BIG partnership immediately after the
REQUIRED: Prepare a schedule to allocate the $25,000 reported 2012 partnership
assignment of the interest to Pet?
income to Mel and Dav.
7. Recording new partner investment The capital accounts of the Fax and Bel partnership on
4. Partnership income allocation—Salary allowance and interest The partnership agreement
September 30, 2011, were:
of Dan, Hen, and Bai provides that profits are to be divided as follows:
■ Bai receives a salary of $24,000, and Hen receives a salary of $18,000 for time spent Fax capital (75% profit percentage) $140,000
in the business. Bel capital (25% profit percentage) 60,000
■ All partners receive 10 percent interest on average capital balances. Total capital $200,000
■ Remaining profits and losses are divided equally among the three partners.
On October 1, Rob was admitted to a 40 percent interest in the partnership when he
On January 1, 2011, the capital balances were Dan, $200,000; Hen, $160,000; and Bai, purchased 40 percent of each existing partner’s capital for $120,000, paid directly to Fax
$150,000. Dan invested an additional $40,000 on July 1 and withdrew $40,000 on October and Bel.
1. Hen and Bai had drawings of $18,000 each during the year.
 REQUIRED: Prepare the journal entry or entries to record Nix’s retirement
REQUIRED
assuming that goodwill, as implied by the payment to Nix, is recorded on the
1. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the
partnership books.
partnership if goodwill is not recorded.
2. Determine the capital balances of Fax, Bel, and Rob after Rob’s admission to the 11. A balance sheet at December 31, 2011, for the Beck, Dee, and Lynn partnership is
partnership if goodwill is recorded, assuming that the book value and fair value summarized as follows ( $ ) :
of recorded assets are equal.
Liabilities 200,000
8. Bow and Mon are partners in a retail business and divide profits 60 percent to Bow and 40
percent to Mon. Their capital balances at December 31, 2011, are as follows: Assets 800,000
Beck capital (50%) 300,000
Bow capital $ 90,000 Loan to Dean 100,000
Dee capital (40%) 300,000
Mon capital 90,000
Lynn capital (10%) 100,000
Total capital $180,000
900,000 900,000
Partnership assets and liabilities have book values equal to fair values. The partners agree
to admit John into the partnership. John purchases a one-third interest in partnership Dee is retiring from the partnership. The partners agree that partnership assets,
capital and profits directly from Bow and Mon (one-third of each of their capital accounts) excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee
for $75,000. should receive $310,000 for her capital balance net of the $100,000 loan. The bonus
approach is used; therefore, no goodwill is recorded.
REQUIRED: Prepare journal entries for the admission of John into the partnership,
assuming that partner-ship assets are revalued. REQUIRED: Determine the capital balances of Beck and Lynn immediately after
Dee’s retirement.

9. Capital balances and profit sharing percentages for the partnership of Man, Eme, and Fot
12. Recording new partner investment
on January 1, 2011, are as follows:
After operating as partners for several years, Gro and Ham decided to sell one-half of
Man (36%) $140,000
each of their partnership interests to Iot for a total of $70,000, paid directly to Gro and
Eme (24%) 100,000
Ham. At the time of Iot’s admittance to the partnership, Gro and Ham had capital
Fot (40%) 160,000
balances of $45,000 and $65,000, respectively, and shared profits 45 percent to Gro and
$400,000
55 percent to Ham.
On January 3, 2011, the partners agree to admit Box into the partnership for a 25 percent
interest in capital and earnings for his investment in the partnership of $120,000. REQUIRED
Partnership assets are not to be revalued. 1. Calculate the capital balances of each of the partners immediately after Iot is
admitted as a partner assum-ing that the assets are not revalued, and prepare a
REQUIRED
second calculation of the capital balances assuming that the assets are revalued at
1. Determine the capital balances of the four partners immediately after the
the time Iot is admitted.
admission of Box.
2. In designing a new partnership agreement, how should profits and losses be
2. What is the profit and loss sharing ratio for Man, Eme, Fot, and Box?
divided?
10. Capital balances and profit and loss sharing ratios for the Nix, Man, and Per partnership on 3. If a new partnership agreement is not established, how will profits and losses be
December 31, 2011, just before the retirement of Nix, are as follows: divided?

Nix capital (30%) $128,000

Man capital (30%) $140,000
Per capital (40%) $160,000
‘
On January 2, 2012, Nix is paid $170,000 cash upon his retirement.