Able, Inc., Betty, Inc and Cobra, Inc. formed a general partnership. Able has a 35% interest, Betty has a 15% interest and Cobra has a 50% interest. Able has a September 30 year-end, Betty has a calendar year end and Cobra has a June 30 year-end. Explain the process that you should use to determine the year-end for the general partnership and what other options that may be available.

Able, Inc., Betty, Inc and Cobra, Inc. formed a general partnership. Able has a 35% interest, Betty has a 15% interest and Cobra has a 50% interest. Able has a September 30 year-end, Betty has a calendar year end and Cobra has a June 30 year-end. Explain the process that you should use to determine the year-end for the general partnership and what other options that may be available.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 3EA: The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have...

See similar textbooks

Similar questions

Given the following information about AKing & Lee form a partnership. The partnership agreement provides for (1) salary allowances of $8,400 to King and $6,000 to Lee , (2) interest on capital of 10%, and (3) the remaining income will be allocated equally . Capital balances on January 1 were King $28,000 , and Lee $24,000 . In 2018 , partnership net income is $22,000 . Required: Allocate net income between King and LeeB partnership A B Capital 200,000 150,000 Interest on capital is 10% Net income 50,000 Required: Allocate net income between A and B assuming that any remaining income will be allocated equally.
May and Jun are partners with profit and loss ratio of 40:60 and capital balares of P600,000 and P400,000 respectively. On June 09, 2022, Julie was admitted into the partnership by investment for a 20% of the total partnership capitalization. What is Jun's new Proft and Loss Ratio after the admission of Julie? Note: Express your answer either in percentage or decimal. example: 50% or 0.50
On June 30, 2020, the statement of financial position for the partnership of A, B, and C together with their respective profits and loss ratios, were as follows: Assets, at cost - P200,000 A, Loan - 10,000 A, Capital (20%) - 35,000 B, Capital (30%) - 75,000 C, Capital (50%) - 80,000 A decided to retire from the partnership. by mutual agreement, the assets to be adjusted to their fair value of P220,000 at June 30, 2020. It was agreed that the partnership would pay A P60,000 cash for A's partnership interest, including A 's loan which is to be repaid in full. No goodwill/ asset revaluation is to be recorded. After A's retirement, what is the balance of B's capital account?
Assume that on January 1, 2021 the partnership of Tom Jones and Rita Charles is considering admitting a new partner Terry Adams. After the assets of the partnership have been adjusted to current market value, the capital balance of Jones is $40,000 and the capital balance of Charles is $48,000. Jones and Charles agree to admit Adams to the partnership for $62,000. Adams will received a 25% equity in the partnership and will participate equally with Jones and Charles in the partnership income and losses. Prepare the entry to record the admission of Terry Adams.
The partnership agreement of Angela and Dawn has the following provisions: The partners are to earn 10 percent on the average capital.Angela and Dawn are to earn salaries of $31,000 and $15,000, respectively.Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela’s average capital is $63,000 and Dawn’s is $44,000.Required:Prepare an income distribution schedule assuming the income of the partnership is (a) $91,000 and (b) $22,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? (Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.)
The partnership agreement of Angela and Dawn has the following provisions: The partners are to earn 10 percent on the average capital. Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela’s average capital is $66,000 and Dawn’s is $52,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $33,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign.
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2018: According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses while Porthos receives 30 percent and Aramis, 20 percent. The book value of each asset and liability should be considered an accurate representation of fair value. For each of the following independent situations, prepare the journal entry or entries to be recorded by the partnership. (Round to nearest dollar.) Porthos, with permission of the other partners, decides to sell half of his partnership interest to D’Artagnan for $50,000 in cash. No asset revaluation or goodwill is to be recorded by the partnership. All three of the present partners agree to sell 10 percent of each partnership interest to D’Artagnan for a total cash payment of $25,000. Each partner receives a negotiated portion of this amount. Goodwill is recorded as a result…
A partnership is considering selling a 30% interest in the partnership to an incoming partner for 30% of the existing capital balances. What concerns might you have with this proposal?
The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partners new agreement will share profit and loss in a 1:3 ratio.
A client of yours is forming a partnership and has asked you to review a draft of the partnership agreement. In particular, the client is interested in your thoughts regarding the section dealing with the withdrawal of a partner. Your client also anticipates that on an ongoing basis individual partners will draw significant funds out of the partnership after the fiscal year-end. These withdrawals will be based on a percentage of production fees generated by each of the partners. Selected excerpts from that section are as follows: A withdrawing partner must notify the partnership of his/her intent to withdraw by registered mail. The partnership has the first right to acquire the withdrawing partner’s interest in the partnership and must exercise its right within 60 days. If the partnership is not interested in acquiring the withdrawing partner’s interest, then the interest may be sold to an individual partner or another individual. However, any sale to another individual requires the…
The DJ Partnership has two partners, Dawn and Jack. Each partner's basis in his or her partnership interest is $14,000 before any distribution. The partnership distributes $23,000 cash to Dawn and $5,000 cash to Jack. Read the requirements. Requirement a. Assuming a current distribution, determine for each partner (1) gain or loss recognized and (2) basis in the partnership interest after the distribution. (Complete all input fields. Enter a $0 for any zero balances. Enter a loss with a minus sign or parentheses.) Dawn Jack (1) Gain (loss) recognized Requirements (2) Basis in the partnership interest after the distribution a. Assuming a current distribution, determine for each partner (1) gain or loss recognized and (2) basis in the partnership interest after the distribution. b. Assuming a liquidating distribution, determine each partner's gain or loss recognized.
On January 1, 2019, David and Enrile decided to form a partnership. At the end of the year, the partnership had a credit balance in its income summary account of P 120,000. The capital accounts of the partnership show the following transactions below. David Balance, January 1 P 300,000 Additional Investment, July 16 80,000 Withdrawal, September 15 ( 30,000) Enrile Balance, January 1 P 250,000 Additional Investment, May 8 100,000 Withdrawal, October 15 ( 75,000) Assuming that an interest if 20% per annum is given on average capital and the balance of the profits is divided equally, how much is the share of Enrile and David in profits for the year 2019?