a. Determine D'Lake, Green, Divot, recognized gain or loss upon formation of Slicenhook.b. What is D'Lake, Green, Divot, initial tax basis in Slicenhook on January 2, 2022?c. Prepare Slicenhook's opening tax basis balance sheet as of January 2, 2022. Cash__Land__Total__ Liabilities__Tax Capital:D'Lake__Green__Divot__Total__ Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf club manufacturing business together. On January 2, 2022, D'Lake, Green, and Divot form the Slicenhook Partnership, a general partnership. Slicenhook's main product will be a perimeter-weighted titanium driver with a patented graphite shaft. All three partners plan to actively participate in the business. The partners contribute the following property to form Slicenhook:| Partner | Contribution ||-----------|--------------------------------|| Carrie D'Lake | Land, FMV $469,000Basis $469,000, Mortgage $69,000 || Reed A. Green | Cash $400,000 || Doug A. Divot | Cash $400,000 |Carrie had recently acquired the land with the idea that she would contribute it to the newly formed partnership. The partners agree to share in profits and losses equally. Slicenhook elects a calendar year-end and the accrual method of accounting.In addition, Slicenhook received a $1,608,000 recourse loan from Big Bank at the time the contributions were made. Slicenhook uses the proceeds from the loan and the cash contributions to build a state-of-the-art manufacturing facility ($1,245,000), purchase equipment ($627,000), and produce inventory ($418,000). With the remaining cash, Slicenhook invests $54,000 in the stock of a privately owned graphite research company and retains ($64,000) as working cash.Slicenhook operates on a just-in-time inventory system so it sells all inventory and collects all sales immediately. That means that at the end of the year, Slicenhook does not carry any inventory or accounts receivable balances. During 2022, Slicenhook has the following operating results:- **Sales**: $1,162,000- **Cost of Goods Sold**: $418,320- **Interest Income from Tax-Exempt Bonds**: $990- **Qualified Dividend Income from Stock**: $1,770- **Operating Expenses**: $135,000- **Depreciation (Tax)**: - $39,000 on Equipment - $90,000 on Equipment - $33,000 **Slicenhook Partnership Overview**Carrie D'Lake, Reed A. Green, and Doug A. Divot, united by their shared passion for golf, established the Slicenhook Partnership on January 2, 2022. This general partnership focuses on producing perimeter-weighted titanium golf clubs featuring patented graphite shafts. The initial contributions to the partnership were as follows:**Partner Contributions:**- **Carrie D'Lake:** Contributed land with a fair market value (FMV) of $469,000. The land has a basis of $469,000 and a mortgage of $69,000.- **Reed A. Green:** Contributed $400,000 in cash.- **Doug A. Divot:** Contributed $400,000 in cash.Carrie D'Lake acquired the land specifically for contribution to this new partnership. The partners agreed to share profits and losses equally, using a calendar year-end and the accrual method of accounting.In addition to partner contributions, Slicenhook secured a $1,608,000 recourse loan from Big Bank. The loan, along with the cash contributions, funded:- State-of-the-art manufacturing facility: $1,245,000- Purchase of equipment: $627,000- Production inventory: $418,000- Investment in graphite research company stock: $54,000- Retained cash for operations: $64,000Slicenhook adheres to a just-in-time inventory system, ensuring immediate sale and collection with no retained inventory or accounts receivable at year-end.**2022 Operating Results:**- Sales: $1,162,000- Cost of Goods Sold (COGS): $418,320- Interest income from tax-exempt bonds: $990- Qualified dividend income from stock: $1,770- Operating expenses: $135,000- Depreciation (tax purposes): Equipment $39,000, Total equipment depreciation $90,000, Building $33,000, Total $162,000- Interest expense on debt: $210,000The success in 2022 allowed for the purchase of $42,000 in tax-exempt bonds and resulted in a principal loan payment of $300,000 to Big Bank, plus a distribution of $100,000 to each partner on December 31, 2022.**2023 Operating Results:**- Sales

It is an agreement between two or more parties to conduct the business and share the profits and…

Answered: Carrie D'Lake, Reed A. Green, and Doug…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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a. Determine D'Lake, Green, Divot, recognized gain or loss upon formation of Slicenhook.

b. What is D'Lake, Green, Divot, initial tax basis in Slicenhook on January 2, 2022?

c. Prepare Slicenhook's opening tax basis balance sheet as of January 2, 2022.

Cash__

Land__

Total__

Liabilities__

Tax Capital:

D'Lake__

Green__

Divot__

Total__

**Slicenhook Partnership Overview**

Carrie D'Lake, Reed A. Green, and Doug A. Divot, united by their shared passion for golf, established the Slicenhook Partnership on January 2, 2022. This general partnership focuses on producing perimeter-weighted titanium golf clubs featuring patented graphite shafts. The initial contributions to the partnership were as follows:

**Partner Contributions:**

- **Carrie D'Lake:** Contributed land with a fair market value (FMV) of $469,000. The land has a basis of $469,000 and a mortgage of $69,000.
- **Reed A. Green:** Contributed $400,000 in cash.
- **Doug A. Divot:** Contributed $400,000 in cash.

Carrie D'Lake acquired the land specifically for contribution to this new partnership. The partners agreed to share profits and losses equally, using a calendar year-end and the accrual method of accounting.

In addition to partner contributions, Slicenhook secured a $1,608,000 recourse loan from Big Bank. The loan, along with the cash contributions, funded:

- State-of-the-art manufacturing facility: $1,245,000
- Purchase of equipment: $627,000
- Production inventory: $418,000
- Investment in graphite research company stock: $54,000
- Retained cash for operations: $64,000

Slicenhook adheres to a just-in-time inventory system, ensuring immediate sale and collection with no retained inventory or accounts receivable at year-end.

**2022 Operating Results:**

- Sales: $1,162,000
- Cost of Goods Sold (COGS): $418,320
- Interest income from tax-exempt bonds: $990
- Qualified dividend income from stock: $1,770
- Operating expenses: $135,000
- Depreciation (tax purposes): Equipment $39,000, Total equipment depreciation $90,000, Building $33,000, Total $162,000
- Interest expense on debt: $210,000

The success in 2022 allowed for the purchase of $42,000 in tax-exempt bonds and resulted in a principal loan payment of $300,000 to Big Bank, plus a distribution of $100,000 to each partner on December 31, 2022.

**2023 Operating Results:**

- Sales

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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d. Using the operating results, what are Slicenhook's ordinary income and separately stated items for 2023 and 2024? What amount of Slicenhook's income for each period would each of the partners receive?

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