Problem -1 Individual vs.

Individual
Cash 120,000
Inventory 120,000
Equipment 240,000
A. Capital 480,000

Cash 120,000
Land 240,000
Building 480,000
Mortgage 240,000
A. Capital 600,000
II. Partnership Formation: Bonus and Goodwill Methods
Equal Capital Interest
Requirement #1
John Jeff Jane
Cash 100,000 -
OE 110,000 -
NP (30,000) -
100,000 80,000 - 180,000
Capitals
John 60,000
Jeff 60,000
Jane 60,000

Requirement #2
John Jeff Jane
Cash 100,000 -
OE 110,000 -
NP (30,000) -
100,000 80,000 - 180,000
Goodwill 90,000
Interest Goodwill Capitals
John 60,000 30,000 90,000
Jeff 60,000 30,000 90,000
Jane 60,000 30,000 90,000
III. Partnership Transactions and Capital Statements
Requirement #1 Initial Investment

Cash 13,000 Cash 12,000

AR 8,000 AR 6,000
OS 2,000 OS 800
OE 30,000 Land 30,000
AP 2,000 AP 5,000
Tom, Capital 51,000 Mortgage Payable 18,800
Julie, Capital 25,000
Capital
Tom 51,000
Julie 25,000
76,000

Income Summary 15,000 Income Summary 13,000

Tom, Drawing 15,000 Julie, Drawing 13,000

Tom, Capital 15,000

Julie, Capital 13,000
Income Summary 28,000

Requirement #2
IV. Partnership Formation - Individual vs. Sole Proprietor
Requirement #1 Entries
a Allowance for Doubtful Accounts 1,800
H, Capital 1,800

Interest Receivable 720

H, Capital 720

H, Capital 6,000
Merchandise Inventory 6,000

H, Capital 4,800
Accumulated Depreciation 4,800

Prepaid Expense 2,400

H, Capital 4,800
Accrued Expense 7,200

b Allowance for Doubtful Accounts 4,800

Depreciation 10,800
Accounts Payable 12,000
Notes Payable 60,000
Accrued Expense 7,200
H, Capital 232,200
Cash 120,000
Accoutns Receivable 48,000
Notes Receivable 60,000
Inventory 21,000
Equipment 72,000
Interest Receivable 3,600
Prepaid Expense 2,400

c Cash 120,000
Accoutns Receivable 48,000
Notes Receivable 60,000
Inventory 21,000
Equipment 72,000
Interest Receivable 3,600
Prepaid Expense 2,400
Allowance for Doubtful Accounts 4,800
Depreciation 10,800
Accounts Payable 12,000
Notes Payable 60,000
Accrued Expense 7,200
H, Capital 232,200 348,300
Cash 116,100
I, Capital 116,100