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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text: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
$12,000
9,000
4,000
Сapital
$33,000
(SO 3, 4)
J. Leno
L. Arthur
20,000
10,000
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) (1) Leno $20,000
(2) Leno $14,000
(3) Leno $24,200
(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.
(c) Reno $45,200
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