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1. Summers and Winters formed a partnership on January 1. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for year 1 and year 2 was $75,000 and $120,000, respectively. a. Determine each partner's share of the net income for each year, assuming each of the following independent situations: (1) Income is divided based on the partners' failure to sign an agreement. (2) Income is divided based on a 2:1 ratio (Summers: Winters). (3) Income is divided based on the ratio of the partners' original capital investments. (4) Income is divided based on interest allowance of 12% on the original capital investments; salary allowance to Summers of $30,000 and Winters of $25,000; and the remainder to be divided equally. b. Prepare the journal entry to record the allocation of the Year 1 income under alternative (4) above.

1. Summers and Winters formed a partnership on January 1. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for year 1 and year 2 was $75,000 and $120,000, respectively. a. Determine each partner's share of the net income for each year, assuming each of the following independent situations: (1) Income is divided based on the partners' failure to sign an agreement. (2) Income is divided based on a 2:1 ratio (Summers: Winters). (3) Income is divided based on the ratio of the partners' original capital investments. (4) Income is divided based on interest allowance of 12% on the original capital investments; salary allowance to Summers of $30,000 and Winters of $25,000; and the remainder to be divided equally. b. Prepare the journal entry to record the allocation of the Year 1 income under alternative (4) above.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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5:34 1 1. Summers and Winters formed a partnership on January 1. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for year 1 and year 2 was $75,000 and $120,000, respectively. a. Determine each partner's share of the net income for each year, assuming each of the following independent situations: Date Account title and Explanation Jan 1.2020 Cash |Equipment Summers, Capital Investment Summer in partners 1/2020 Cash Inventory Winters, Capital (1) Income is divided based on the partners' failure to sign an agreement. 50/50 summers winters cash 90,000 30,000 ne equipment 60,000 + inventory 20,000 ne total invested 150,000 50,000 year 1 income 75,000 75,000/2= 75,000/2= 37,500 37500 year 2 income 120,000 120,000/2=60,0 120,000/2=60,0 00 0
Transcribed Image Text:5:34 1 1. Summers and Winters formed a partnership on January 1. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for year 1 and year 2 was $75,000 and $120,000, respectively. a. Determine each partner's share of the net income for each year, assuming each of the following independent situations: Date Account title and Explanation Jan 1.2020 Cash |Equipment Summers, Capital Investment Summer in partners 1/2020 Cash Inventory Winters, Capital (1) Income is divided based on the partners' failure to sign an agreement. 50/50 summers winters cash 90,000 30,000 ne equipment 60,000 + inventory 20,000 ne total invested 150,000 50,000 year 1 income 75,000 75,000/2= 75,000/2= 37,500 37500 year 2 income 120,000 120,000/2=60,0 120,000/2=60,0 00 0
5:33 1 LTE Grp-Exercise 12-3, Student-5.docx Grp Exercise 12-3, Acct 202 Group Names: 1. Summers and Winters formed a partnership on January 1. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for year 1 and year 2 was $75,000 and $120,000, respectively. a. Determine each partner's share of the net income for each year, assuming each of the following independent situations: (1) Income is divided based on the partners' failure to sign an agreement. (2) Income is divided based on a 2:1 ratio (Summers: Winters). (3) Income is divided based on the ratio of the partners' original capital investments. (4) Income is divided based on interest allowance of 12% on the original capital investments; salary allowance to Summers of $30,000 and Winters of $25,000; and the remainder to be divided equally. b. Prepare the journal entry to record the allocation of the Year 1 income under alternative (4) above. 2. Brit, Franc, and Scot who share income and loss in a 2:2:1 ratio, plan to liquidate their partnership. At liquidation, their balance sheet appears as follows. Prepare journal entries for (a) the sale of land and equipment sold as a package for $500,000, (b) the allocation of the gain or loss, (c) the payment of the liabilities, and (d) the distribution of cash to the individual partners. Brit, Franc, and Scot Balance Sheet January 31 Assets Cash Liabilities and Equity Accounts Payable $150,000 $221,500 Equipment Land 200,000 400,000 Brit, Capital Frane, Capital Scot, Capital 210,000 178,000 140,500 Total assets $750.000 Total liabilities and equity $750,000 Dashboard Calendar To Do Notifications Inbox 因
Transcribed Image Text:5:33 1 LTE Grp-Exercise 12-3, Student-5.docx Grp Exercise 12-3, Acct 202 Group Names: 1. Summers and Winters formed a partnership on January 1. Summers contributed $90,000 cash and equipment with a market value of $60,000. Winters' investment consisted of: cash, $30,000; inventory, $20,000; all at market values. Partnership net income for year 1 and year 2 was $75,000 and $120,000, respectively. a. Determine each partner's share of the net income for each year, assuming each of the following independent situations: (1) Income is divided based on the partners' failure to sign an agreement. (2) Income is divided based on a 2:1 ratio (Summers: Winters). (3) Income is divided based on the ratio of the partners' original capital investments. (4) Income is divided based on interest allowance of 12% on the original capital investments; salary allowance to Summers of $30,000 and Winters of $25,000; and the remainder to be divided equally. b. Prepare the journal entry to record the allocation of the Year 1 income under alternative (4) above. 2. Brit, Franc, and Scot who share income and loss in a 2:2:1 ratio, plan to liquidate their partnership. At liquidation, their balance sheet appears as follows. Prepare journal entries for (a) the sale of land and equipment sold as a package for $500,000, (b) the allocation of the gain or loss, (c) the payment of the liabilities, and (d) the distribution of cash to the individual partners. Brit, Franc, and Scot Balance Sheet January 31 Assets Cash Liabilities and Equity Accounts Payable $150,000 $221,500 Equipment Land 200,000 400,000 Brit, Capital Frane, Capital Scot, Capital 210,000 178,000 140,500 Total assets $750.000 Total liabilities and equity $750,000 Dashboard Calendar To Do Notifications Inbox 因
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