P12-2C At the end of its first year of operations on December 31, 2012, the LAX Company's Journalize divisions of net in- accounts show the following. come and prepare a partners’ capital statement. Partner Drawings Сapital (SO 3, 4) J. Leno $12,000 9,000 4,000 $33,000 20,000 10,000 L. Arthur J. Xavier The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2012 has not been closed to the partners’ capital accounts. Instructions (a) Journalize the entry to record the division of net income for 2012 under each of the follow- ing independent assumptions. (1) Net income is $40,000. Income is shared 5:3:2. (2) Net income is $30,000. Leno and Arthur are given salary allowances of $11,000 and $10,000, respectively. The remainder is shared equally. (3) Net income is $33,000. Each partner is allowed interest of 10% on beginning capital bal- ances. Leno is given an $18,000 salary allowance. The remainder is shared equally. (b) Prepare a schedule showing the division of net income under assumption (3) above. (c) Prepare a partners’ capital statement for the year under assumption (3) above. (a) (1) Leno $20,000 (2) Leno $14,000 (3) Leno $24,200 (c) Reno $45,200

P12-2C At the end of its first year of operations on December 31, 2012, the LAX Company's Journalize divisions of net in- accounts show the following. come and prepare a partners’ capital statement. Partner Drawings Сapital (SO 3, 4) J. Leno $12,000 9,000 4,000 $33,000 20,000 10,000 L. Arthur J. Xavier The capital balance represents each partner's initial capital investment. Therefore, net income or net loss for 2012 has not been closed to the partners’ capital accounts. Instructions (a) Journalize the entry to record the division of net income for 2012 under each of the follow- ing independent assumptions. (1) Net income is $40,000. Income is shared 5:3:2. (2) Net income is $30,000. Leno and Arthur are given salary allowances of $11,000 and $10,000, respectively. The remainder is shared equally. (3) Net income is $33,000. Each partner is allowed interest of 10% on beginning capital bal- ances. Leno is given an $18,000 salary allowance. The remainder is shared equally. (b) Prepare a schedule showing the division of net income under assumption (3) above. (c) Prepare a partners’ capital statement for the year under assumption (3) above. (a) (1) Leno $20,000 (2) Leno $14,000 (3) Leno $24,200 (c) Reno $45,200

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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A-1
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