Partners D, E, F, and G share profits 40%, 30%, 15%, and 15%, respectively. Their partnership agreement provides that in the event of the death of a partner, the firm shall continue until the end of the fiscal period. Profits shall be considered to have been earned proportionately during this period, and the deceased partner's capital shall be adjusted by the proper share of the profit or loss until the date of death. From that date until the date of settlement with the estate, there shall be added interest of 6% computed on the adjusted capital. The remaining partners shall continue to share profits in the old ratio. Payment to the estate shall be made within one year from the date of the partner's death. Partner G died on November 16. On December 31, the end of the six-month period, account balances on the partnership books before the income summary account is closed are as follows:
Partners D, E, F, and G share profits 40%, 30%, 15%, and 15%, respectively. Their partnership agreement provides that in the event of the death of a partner, the firm shall continue until the end of the fiscal period. Profits shall be considered to have been earned proportionately during this period, and the deceased partner's capital shall be adjusted by the proper share of the profit or loss until the date of death. From that date until the date of settlement with the estate, there shall be added interest of 6% computed on the adjusted capital. The remaining partners shall continue to share profits in the old ratio. Payment to the estate shall be made within one year from the date of the partner's death. Partner G died on November 16. On December 31, the end of the six-month period, account balances on the partnership books before the income summary account is closed are as follows:
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Partners D, E, F, and G share profits 40%, 30%, 15%, and 15%, respectively. Their
partnership agreement provides that in the event of the death of a partner, the
firm shall continue until the end of the fiscal period. Profits shall be considered to
have been earned proportionately during this period, and the deceased partner's
capital shall be adjusted by the proper share of the profit or loss until the date of
death. From that date until the date of settlement with the estate, there shall be
added interest of 6% computed on the adjusted capital. The remaining partners
shall continue to share profits in the old ratio. Payment to the estate shall be
made within one year from the date of the partner's death. Partner G died on
November 16. On December 31, the end of the six-month period, account
balances on the partnership books before the income summary account is
closed are as follows:
P 15,000 Notes Payable
Accounts Receivable 140,000 Accounts Payable
P 30,000
141,000
84,000
75,000
Cash
190,000 D, Capital
90,000 E, Capital
33,000 F, Capital
G, Capital
Inventories
Machinery, net
Furniture, net
48,000
45,000
Income Summary
P 468,000
45,000
P 468,000
Total
The income summary account is for the period July 1 - December 31 and is closed on
December. On this date, F decides to retire. Dand E agree to pay the balance in F's capital
account after distributions of profit, less 20%, and issue a partnership 60-day, 6% note to F in
settlement. What amount of note payable must be issued to F?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education