KLMN Partnership’s financial records show the following: Gross receipts from sales$ 670,000Cost of goods sold(460,000)Operating expenses(96,800)Business meals not provided by a restaurant(6,240)Section 1231 loss on equipment sale(13,500)Charitable contribution(1,500)Distributions to partners(10,000)Mr. Ty is a 10 percent general partner in KLMN. During the year, he received a $1,000 cash distribution from KLMN.)If Mr. Ty’s adjusted basis in his KLMN interest was $45,000 at the beginning of the year, compute his adjusted basis at the end of the year. Assume that KLMN’s debt did not change during the year-Mr.Ty's adjusted basis at the beginning of year:-Ordinary business income:-Adjustments: -Mr. Ty's adjusted basis at end of year:2.) How would your basis computation change if KLMN’s debt at the end of the year was $28,000 more than its debt at the beginning of the year?

Solution:-1 Calculation of ordinary business income as follows:- Notes:- KLMN's Ordinary Business…

Answered: KLMN Partnership’s financial records…

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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KLMN Partnership’s financial records show the following:

Gross receipts from sales	$ 670,000
Cost of goods sold	(460,000)
Operating expenses	(96,800)
Business meals not provided by a restaurant	(6,240)
Section 1231 loss on equipment sale	(13,500)
Charitable contribution	(1,500)
Distributions to partners	(10,000)

Mr. Ty is a 10 percent general partner in KLMN. During the year, he received a $1,000 cash distribution from KLMN.

)If Mr. Ty’s adjusted basis in his KLMN interest was $45,000 at the beginning of the year, compute his adjusted basis at the end of the year. Assume that KLMN’s debt did not change during the year

-Mr.Ty's adjusted basis at the beginning of year:

-Ordinary business income:

-Adjustments:

-Mr. Ty's adjusted basis at end of year:

2.) How would your basis computation change if KLMN’s debt at the end of the year was $28,000 more than its debt at the beginning of the year?

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