Joe and Clara contribute property to form JC Partnership on January 1, 2019. Joe contributes land with a basis and FMV of $60,000. The land is encumbered by a $35,000 loan. Clara on the other hand contributed $25,000 cash. During 2019, JC Partnership borrowed $100,000 to construct a parking lot on the land. At the end of 2019, JC Partnership had payables of $10,000 owing to various suppliers. During 2020, JC Partnership paid back all of its loans and payables outstanding and made a distribution to Joe of $120,000 and to Clara of $90,000. JC Partnership had a total net income of $150,000 for 2020. There was zero net income in 2019. Required: First, calculate each of Joe's and Clara's basis in the partnership as of

Joe and Clara contribute property to form JC Partnership on January 1, 2019. Joe contributes land with a basis and FMV of $60,000. The land is encumbered by a $35,000 loan. Clara on the other hand contributed $25,000 cash. During 2019, JC Partnership borrowed $100,000 to construct a parking lot on the land. At the end of 2019, JC Partnership had payables of $10,000 owing to various suppliers. During 2020, JC Partnership paid back all of its loans and payables outstanding and made a distribution to Joe of $120,000 and to Clara of $90,000. JC Partnership had a total net income of $150,000 for 2020. There was zero net income in 2019. Required: First, calculate each of Joe's and Clara's basis in the partnership as of

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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Eugene and Alfred are partners in their Ghost Fighting business. Alfred is the managing partner. As of December 2020, their capital account showed the following: Eugene Capital Dr. 1-Jul 45,000 Dr. 1-Dec 30,000 Cr. Jan. 1- 300,000 Cr. Nov. - 105,000 Cr. Apr. - 30,000 1-Jan Alfred Capital Dr. 1-Apr 90000 Cr. Jan - 450000 Dr. 1-Dec - 105000 Cr. Jun - 150000 Cr. oct.- 195000 CASE I: Assuming the partnership earned a net profit of P360,000. CASE II: Assuming the partnership incurred a net loss of P68,000 Required: On your answer sheet (yellow pad), using the following agreements, distribute the profit and losses in Case I & II to Eugene & Alfred. Make a journal entry after your computation. 1) Equally 2) 2:4 ratio to Eugene and Alfred, respectively 3) 60% 40% ratio respectively
Peyton sells an office building and the associated land on May 1 of the current year. Under the terms of the sales contract, Peyton is to receive $2,164,200 in cash. The purchaser is to assume Peyton's mortgage of $1,298,520 on the property. To enable the purchaser to obtain adequate financing, Peyton is to pay the $25,970 in points charged by the lender. The broker's commission on the sale is $86,568. What is Peyton's amount realized? The amount realized by Peyton is $
Liam and Katano formed a partnership to open a sushi restaurant by investing $106,000 and $116,000, respectively. They agreed to share profit based on an allocation to Liam of an annual salary allowance of $161,000, interest allowance to both Liam and Katano equal to 12% of their beginning-of-year capital balance, and any balance based on a 1:3 ratio, respectively. At the end of their first year, December 31, 2023, the Income Summary had a credit balance of $41,000. Liam withdrew $18,000 during the year and Katano $35,000. Required: 1. Determine each partner's share if the first-year profit was $41,000. Prepare the entry to close the Income Summary on December 31, 2023. (Leave no cell blank. Enter "0" when the answer is zero. Negative answers should be indicated by a minus sign.) Total salaries and interest allocation Balance of profit Remainder 1:3 ratio: Balance of profit Shares of each partner Share to Liam Share to Katano Total
For calendar year 2019, Jon and Betty Hansen (ages 59 and 60) file a joint returm reflecting AGI of $280,000. They incur the following expenditures: Medical expenses before 10% of AGI floor $30,000 Casualty loss caused by electrical fire in their home 30,000 Interest on home mortgage 11,000 Interest on credit cards 800 Property taxes on home 13,000 Charitable contributions 17,000 State income tax 15,000 Tax return preparation fees 1,200 What is the amount of itemized deductions the Hansens may claim?
Tyrone and Akira, who are married, incurred and paid the following amounts of interest during 2020: Home acquisition debt interest: $15,000Credit card interest: $5,000Home equity loan interest (used for home improvement): $6,500Investment interest expense: $10,000Mortgage insurance premiums (PMI): $1,000 With 2020 net investment income of $2,000, calculate the amount of their allowable deduction for investment interest expense and their total deduction for allowable interest. Home acquisition principal and the home equity loan principal combined are less than $750,000.
Laurel and Hardy form a 50/50 partnership (HaHa Partners) in 2018. Laurel contributes land with a fair market value of $700,000 and an adjusted basis of $500,000. The land is subject to a $250,000 mortgage which the partnership assumes. Hardy contributes $450,000 of cash. In 2020, the partnership sells the land (originally contributed by Laurel) for $900,000. How much gain will Laurel report on his 2020 1040 return?
Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $328.000. $240.000, and $152.000, respectively. An articles of partnership agreement is drawn up stipulating the following: ⚫ Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year. Profits and losses are allocated according to the following plan: 1. Each partner receives an annual salary allowance of $55 per billable hours worked. 2. Interest is credited to the partners' capital accounts at the rate of 12 percent of the beginning capital balance for the year. 3. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest.…
Ted Coverdale and Jim Kulak set up a new limited liability company on May 16, 2020. Ted contributes a warehouse and land worth a combined $1,098,000. Market value of the warehouse is $264,000. Jim contributes $893,000 in cash. Write the journal entry to record the contributions to the LLC.
Kimble, Sykes, and Gerard open an accounting practice on January 1, 2022, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, Sykes, and Gerard contribute cash and other properties valued at $248,000, $200,000, and $112,000, respectively. An articles of partnership agreement is drawn up stipulating the following: Personal drawings are allowed annually up to an amount equal to 10 percent of the partner's beginning capital balance for the year. Profits and losses are allocated according to the following plan: Each partner receives an annual salary allowance of $55 per billable hours worked. Interest is credited to the partners’ capital accounts at the rate of 12 percent of the beginning capital balance for the year. Kimble and Sykes are eligible for an annual bonus of 10 percent of net income after subtracting the bonus, salary allowance, and interest. The…
Taylor and Tanner formed a partnership. Taylor contributed $50,000 in cash. Tanner contributed land and buildings he purchased for $50,000 some time ago. His tax basis in the property is now $30,000, although it was recently appraised for $70,000. There is a $15,000 mortgage attached to the building that the partnership will assume. What is the amount of Tanner’s capital account after his contribution? a. $50,000 b. $30,000 c. $35,000 d. $55,000
Luke, Lando and Leia decide to start a partnership called LLL Consulting on January 1, 2023. Each of them contribute a number of items to the partnership, which are listed below. Luke contributed $6,700 cash and a building he had purchased for $239,000. The building now has a market value of $262,900. Lando contributed $3,100 cash, equipment he had purchased for $32,300 and a note payable worth $23,000. The equipment has a market value of $29,070. Leia contributed $7,500 cash, furniture she has purchased for $11,900 and accounts payable worth $6,600. The furniture has a market value of $9,520. Prepare the journal entries to record the contributions of each partner. Do not enter dollar signs or commas in the input boxes. For transactions with more than one debit or credit, enter the accounts in alphabetical order. Date Account Title and Explanation Jan 1 Jan 1 Jan 1 Investment by Luke Investment by Lando Investment by Leia + ♦ → Debit Credit