Partners A and B comprise the AB partnership and each has a $90,000 capital balance. The existing partnership's assets are stated at fair value, and partners A and B share profits and losses of 40% and 60%, respectively. Partner C is admitted with a 20% ownership interest for a $40,000 direct cash payment to the current partners. If the goodwill method is employed to record partner C's admission, Partner A's capital balance after C's admission will be:
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Partners A and B comprise the AB
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- A partnership began its first year of operations with the following capital balances: Young, Capital $ 143,000 Eaton, Capital $ 104,000 Thurman, Capital $ 143,000 The Articles of Partnership stipulated that profits and losses be assigned in the following manner: Young was to be awarded an annual salary of $26,000 and $13,000 salary was to be awarded to Thurman. Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year. • The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and Thurman, respectively. • Each partner withdrew $13,000 per year. Assume that the net loss for the first year of operations was $26,000 with net income of $52,000 in the second year. What was the balance in Young's Capital account at the end of the first year? ● ● Multiple Choice O $120,900 $118,300In each of the following independent liquidating distributions in which the partnership also liquidates determine the amount and character of any gain or loss to be recognized by each partner and the basis of each asset (other than cash) received. In each case, assume that distributions of hot assets are proportionate to the partners. Be sure to explain your rationale. c. Neil has a partnership basis of $100,000 and receives $40,000 of cash, inventory with a basis to the partnership of $30,000, and a capital asset with a partner- ship basis of $20,000. The inventory and capital asset have fair market values of $20,000 and $30,000, respectively. d. Oscar has a partnership basis of $40,000 and receives a distribution of $10,000 of cash and an account receivable with a basis of $0 to the partnership (value is $15,000).After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. Cash Grayson Jackson, Capital Harry Barge, Capital Lewan Gorman, Capital b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $
- The Prince-Robbins partnership has the following capital account balances on January 1, 2024: Prince, Capital Robbins, Capital $ 150,000 110,000 Prince is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Robbins after interest of 10 percent is given to each partner based on beginning capital balances. On January 2, 2024, Jeffrey invests $76,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2024, the partnership reports a net income of $36,000. Required: 1. Prepare the journal entry to record Jeffrey's entrance into the partnership on January 2, 2024. 2. Prepare a schedule showing how the 2024 net income allocation to the partners should be determined.Jerry and Sherry own and operate a partnership. Jerry’s capital balance is $50,000 and Sherry’s is $55,000. Jerry and Sherry decided to admit a new partner, Allison, to their partnership. By the terms of their partnership agreement, Jerry and Sherry share income/loss equally. Allison intends to contribute $40,000 cash to receive a twenty-five percent interest in the partnership Required: a. Revalue the partnership assets b. Determine the total equity of the partnership after the new partner is admitted c. Determine the new partner share of the total equity d. Determine the bonus resulting from Allison’s equity of her contribution e. Make journal entries to record Allison’s admission to the partnership. Please solve sub-part e. Show Your Work:ces Gorman and Morton form a partnership on May 1, 2022. Gorman contributes cash of $73,000; Morton conveys title to the following properties to the partnership: Equipment Licensing agreements Book Value $ 26,500 46,500 Fair Value $51,000 59,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Gorman receives a compensation allowance of $1,300 per month. All remaining profits and losses are split 40.60 between Gorman and Morton, respectively. Each partner can make annual cash drawings of $5,000 beginning in 2023. Net income of $22,500 is earned by the business during 2022. Steele is invited to join the partnership on January 1, 2023. Because of her business reputation and financial expertise, she is given a 40 percent interest for $77,000 cash. The bonus approach is used to record this investment,…
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