Specialized Statement

Problem 1-6

CASE 1
Adjusted capital balances Nadine
Unadjusted capital balances 732,000
a. Increase allowance for bad debts (48,000)
b. Loss on sales (8,000)
c. Additional investment made by Nadine 20,000
Adjusted capital balances 696,000

Contributed Agreed
1.) Schedule (under bonus method) Capital Capital
Nadine (60%) 696,000 801,600
James (40%) 640,000 534,400
1,336,000 1,336,000

Contributed Agreed
2.) Schedule (under goodwill method) Capital Capital
Nadine (60%) 696,000 960,000
James (40%) 640,000 640,000
1,336,000 1,600,000

Nadine (60%) 696,000 60% 1,160,000

James (40%) 640,000 40% 1,600,000

CASE 2
3.) Adjusted capital balances Nadine
Unadjusted capital balances 732,000
a. Increase allowance for bad debts (48,000)
b. Loss on sales (8,000)
c. Additional investment made by Nadine 20,000
Adjusted capital balances 696,000

Net capital adjustments

Unadjusted capital balances 732,000
Less: Adjusted capital balances 696,000
Decrease (36,000)

4.) James's additional contribution

Nadine's capital
Divided by Nadine's capital interest
Total partnership or agreed capital
James's capital interest
James's agreed capital
Less: James's adjusted capital
James's additional cash contribution
5.) Total partnership capital

6.) Total partnership assets

Total partnership liabilities
Total partnership capital
Total

Alternative solution Nadine James

Cash 32,000 272,000
Accounts receivable 320,000 240,000
Allowance for doubtful accounts (48,000) (24,000)
Merchandise inventory 400,000 360,000
Office Equipment 100,000 -
Total partnership assets 804,000 848,000

CASE 3
Adjusted capital balances Nadine
Unadjusted capital balances 732,000
a. Increase allowance for bad debts (48,000)
b. Loss on sales (8,000)
c. Additional investment made by Nadine 20,000
d.) Goodwill 39,000
Adjusted capital balances 735,000

7.) Net capital adjustments

Unadjusted capital balances 732,000
Less: Adjusted capital balances 735,000
Increase/(Decrease) 3,000

James's additional contribution

Nadine's capital
Divided by Nadine's capital interest
Total partnership or agreed capital
James's capital interest
James's agreed capital
Less: James's adjusted capital
James's allowed cash withdrawal

8.) Total partnership capital

Nadine's capital
James's capital

9.) Total partnership liabilities

Accounts payable
Payable to James
Alowed cash withdrawal 325,000
Less: Cash available
Cash on hand 152,000
 Proceeds from sale of equipment 96,000 248,000
Total

10.) Total partnership assets

Total partnership liabilities
Total partnership capital
Total

Alternative solution Nadine James

Cash
Accounts receivable 320,000 240,000
Allowance for doubtful accounts (48,000) (24,000)
Merchandise inventory 400,000 360,000
Office Equipment 100,000 -
Goodwill 39,000
Total partnership assets 811,000 576,000
 James
680,000
(24,000)
(16,000)

640,000

Bonus
105,600
(105,600)
-

Goodwill
264,000
-
264,000

James
680,000
(24,000)
(16,000)

640,000

680,000
640,000
(40,000)

696,000
50%
1,392,000
50%
696,000
640,000
56,000
1,392,000

260,000
1,392,000
1,652,000

Total
304,000
560,000
(72,000)
760,000
100,000
1,652,000

James
680,000
(24,000)
(16,000)

640,000

680,000
640,000
(40,000)

735,000
70%
1,050,000
30%
315,000
640,000
(325,000)

1,050,000

735,000
315,000

260,000
 77,000
337,000

337,000
1,050,000
1,387,000

Total
-
560,000
(72,000)
760,000
100,000
39,000
1,387,000