Problem 03 n/i=504,000

a.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus bf 100800 100800
Balance 2:1 172,800 86,400 259200
Totals 336000 168,000 504,000

b.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 84,000 84,000
Balance 2:1 184,000 92,000 276,000
Totals 330400 173600 504,000

c.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 64,000 64,000
Balance 2:1 197,334 98,666 296,000
Totals 323734 180266 504,000

d.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 60,000 60,000
Balance 2:1 200,000 100,000 300,000
Totals 322400 181600 504,000

e.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 76,800 76,800
Balance 2:1 188,800 94,400 283,200
Totals 328,000 176,000 504,000

f.
 A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 96,000 96,000
Balance 2:1 176,000 88,000 264,000
Totals 334400 169600 504,000

g.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 70,451 70,451
Balance 2:1 193,033 96,516 289,549
Totals 325884 178,116 504,000

h.
A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 53,607 53,607
Balance 2:1 204,262 102,131 306,393
Totals 320269.09 183730.91 504,000

CORRECT ANSWER (H)

A B Total
Salaries 48,000 72,000 120,000
Interest 14,400 9,600 24,000
Bonus 84,000 84,000
Balance 2:1 184,000 92,000 276,000
Totals 330400 173600 504,000
Bonus = % (Basis)
Bonus = 20% (504,000)
Bonus = 100800

504,000 - Bonus
B=.20(504,000-B)
B= 100800 - 0.20B
B + 0.20B = 100,800
1.20B = 100,800
B = 84,000

N/I af B & S, bf interest

B=20%(504,000 - B - 120,000
B=20%(384,000 - B)
B=76,800 - 0.20B
B + 0.20B = 76,800
1.20B = 76,800
B= 64,000

N/I af B, S, and I
B=20% (504,000 - B - S - I)
B=20% (504,000 - B - 120,000 - 24,000)
B=20% (360,000 - B)
B=72,000 - 0.20B
B+0.20B = 72,000
1.20B = 72,000
B = 60,000

N/I af S bf B and I
B=20% (504,000 - 120,000)
B=20% (384,000)
B=76,800

N/I after Interest bf B and S

B=20%(504,000 - 24,000)
B=20%(480,000)
B= 96,000

N/I after tax

B = .20 (504,000 - T)
T = .35 (504,000 - B) CORRECT ANSWER (G)
T = 176,400 - .35B A
B = .20 (504,000 - 176,400 + .35B Salaries 48,000
B = .20 (327,600 + .35B) Interest 14,400
B = 65,520 + .07B Bonus bf 100800
.93B = 65,520 Balance 2:1 172,800
B = 70,451 Totals 336000

N/I af bonus and income tax TR - 35% b=.20 (ni - b - t)

B=20% (504,000 - B - T) t = .20 (ni - b)
B= .20 (504,000 - B - 176,400 + .35B) income before - 680400
B= .20 (327,600 - .65B) B=20% (680,400 - B - T)
B = 65,520 - .07B T= 35% (680,400 - B)
B + .07B = 65,520 T= 238140 - .35B
1.07B = 65,520 B= .20 (680,400 - B - 238140 + .35B)
B= 61,233 B= .20 (442260 - .65B
B + .65B = 88452
T= 35% (504,000 - B) 1.65B = 88452
T= 176,400 - .35B B = 53607.27

504,000 - Bonus
B=.20(504,000-B)
B= 100800 - 0.20B
B + 0.20B = 100,800
1.20B = 100,800
B = 84,000
 B Total
72,000 120,000 Bonus = % (Basis)
9,600 24,000 Bonus = 20% (504,000)
100800 Bonus = 100800
86,400 259200
168,000 504,000
Problem 1 60 40
C D
book value fair value skills
Cash 100,000
Equipment 120,000 100,000
C, Capital 200,000

Earnings Expenses
Year 1 150,000 225,000
Year 2 250,000 105,000

Journal Entries
Cash 100000
Equipment 100000
C,Capital 200000

Year 1
Revenue 150000
Income Summary 150000
Income Summary 225000
Expenses 225000

C, Drawing 75,000
Income Summary 75,000

Year 2
Revenue 250000
Income Summary 250000
Income Summary 105000
Expenses 105000

Income Summary 145000

C, Drawing 87000
D, Drawing 58000
Problem 4

G
Date amount months unchanged Average Capital
Jan-01 35,000 5(12 14,583.33
1-Jun 45,000 4(12 15,000
Oct-01 50,000 3(12 12,500
EC: 130000 Ave Capital 42,083.33
total ave 71916.67
H
Date amount months unchanged Average Capital
Jan-01 25,000 2(12 4166.67
Mar-01 35,000 6(12 17500
Sep-01 25,000 2(12 4166.67
Nov-01 20,000 1(12 1666.67
Dec-01 28,000 1(12 2333.33
EC: 133000 Ave Capital 29,833.34

Profit-66,000
10% interest on ave capital balance and the remainder is divided equally
G H Totals
Interest (10%) 4208.333 2983.334 7,191.67
Balance (50/50) 29,404.17 29,404.17 58,808.33
Total 33,612.50 32,387.50 66,000

Income Summary 66,000

G, Drawing 33,612.50
H, Drawing 32,387.50

9,000 will be allocated to H

10% interest on ending capital and the remainder is 60/40
G H Totals
Salaries 9,000 9,000
Interest (10%) 5000 2800 7,800.00
Balance (60/40) 29,520.00 19,680.00 49,200.00
Total 34,520.00 31,480.00 66,000

Income Summary 66,000

G, Drawing 34,520.00
H, Drawing 31,480.00

G H
Salaries 10,000 15000 25,000
Balance 41,000
Total 66,000

Income Summary
G, Drawing
H, Drawing

G H Total
Salaries 20,000 35000 60,000
Interest 4208.33 2,983.33 7,192
Bonus 6000 6,000
Balance -719.17 -719.17 -7,192
Total 29489.16 37264.16 66000
Income Summary
G, Drawing
H, Drawing
 ave capital x .10
Profit = 66,000

66000 - 7191.67 = 58,808.33

58808.33 x .50

66k-26.3k=39.7k
39.7k x .60
39.7k x .40
B= .10 (66000 - B)
B= 6,600 - .10B
B + .10B = 6,600
1.10B = 6,600
B= 6000
problem 2

E, Capital 270,000
Cash 80,000
Furniture 80,000
Merchandise 50,000

F, Capital 200,000
cash 60,000
furniture 80,000
Merchandise 60,000

Year 1 E=10,000x210,000/410,000
Income Summary 10,000 F=10,000x200,000/410,000
E, Drawing 5121.95
F, Drawing 4878.05

Year 2 E=5000/10 x 7
E, Drawing 3,500 F=5000/10 x 3
F, Drawing 1,500
Income Summary 5000

Year 3
Income Summary 15000 E=15000 x 210000/410000
E, Drawing 7682.93 F=15000 x 200000/410000
F, Drawing 7317.07