Required information[The following information applies to the questions displayed below.]Mo, Lu, and Barb formed the MLB Partnership by making investments of $73,800, $287,000, and $459,200, respectively.They predict annual partnership net income of $487,500 and are considering the following alternative plans of sharingincome and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $82,800 to Mo,$62,100 to Lu, and $93,500 to Barb; interest allowances of 10% on their initial capital investments; and the remainingbalance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb.2. Prepare a statement of partners' equity showing the allocation of income to the partners assuming they agree to use plan (c), thatincome earned is $487,500; and that Mo, Lu, and Barb withdraw $38,100, $52,100, and $68,100, respectively, at year-end.Note: Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as negative values.Initial partnership investmentsNet incomeTotal net incomeTotalMLB PARTNERSHIPStatement of Partners' EquityFor Year Ended December 31MoLuBarbTotal0000000$0$0$0$0

The objective of the question is to prepare a statement of partners' equity showing the allocation…

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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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Watts and Lyon are forming a partnership. Watts invests $24,500 and Lyon invests $45,500. The partners agree that Watts will work one-fourth of the total time devoted to the partnership and Lyon will work three-fourths. They have discussed the following alternative plans for sharing income and loss: (a) in the ratio of their initial capital investments; (b) in proportion to the time devoted to the business; (c) a salary allowance of $18,000 per year to Lyon and the remaining balance in accordance with the ratio of their initial capital investments; or (d) a salary allowance of $18,000 per year to Lyon, 9% interest on their initial capital investments, and the remaining balance shared equally. The partners expect the business to perform as follows: Year 1, $17,000 net loss; Year 2, $42,500 net income; and Year 3, $70,833 net income. Required: Complete the tables, one for each of the first three years, by showing how to allocate partnership income or loss to the partners under each of…
Xavier and Yolanda have original investments of $51,500 and $100,100, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%; salary allowances of $27,200 and $29,600, respectively; and the remainder to be divided equally. How much of the net income of $114, 400 is allocated to Xavier? a. $37,500 b. $61, 368 с. $51,140 d. $27,200
Ramer and Knox began a partnership by investing $60,000 and $90,000, respectively. During its first year, the partnership earned $160,000. Prepare calculations showing how the $160,000 income is allocated under each separate plan for sharing income and loss. 1. The partners did not agree on a plan and therefore share income equally. 2. The partners agreed to share income and loss in proportion to their initial investments. 3. The partners agreed to share income by giving a $50,000 per year salary allowance to Ramer, a $40,000 per year salary allowance to Knox, 10% interest on their initial capital investments, and the remaining balance shared equally.
Required information [The following information applies to the questions displayed below.] Mo, Lu, and Barb formed the MLB Partnership by making investments of $73,800, $287,000, and $459,200, respectively. They predict annual partnership net income of $487,500 and are considering the following alternative plans of sharing income and loss: (a) equally; (b) in the ratio of their initial capital investments; or (c) salary allowances of $82,800 to Mo, $62,100 to Lu, and $93,500 to Barb; interest allowances of 10% on their initial capital investments; and the remaining balance shared as follows: 20% to Mo, 40% to Lu, and 40% to Barb. 2. Prepare a statement of partners' equity showing the allocation of income to the partners assuming they agree to use plan (c), that income earned is $487,500; and that Mo, Lu, and Barb withdraw $38,100, $52,100, and $68,100, respectively, at year-end. Note: Do not round intermediate calculations. Enter all allowances as positive values. Enter losses as…
Xavier and Yolanda have original investments of $46,000 and $103,600, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%; salary allowances of $26,800 and $31,800, respectively; and the remainder to be divided equally. How much of the net income of $111,000 is allocated to Xavier? Oa. $47,240 Ob. $56,688 Oc. $36,000 Od. $26,800
This project covers general partnership basis issues including computation of partners' adjusted basis, determination of current-year tax position, preparation of tax forms, and creation of a memo to the partners with an analysis of their current-year tax issues and changes to basis. In the current year, Mary, Andrew, and Paul formed Venezia General Partnership. Mary contributed $55,000 cash, Andrew contributed $55,000, and Paul contributed land with a cash basis of $70,000 and a fair market value of $180,000. The partnership assumed a $70,000 mortgage on the land; no partner is personally liable for the mortgage. At the end of the current year, Venezia made a $7,000 payment on the mortgage. Mary, Andrew, and Paul will split all profits and losses equally. Current-year operations had the following results: Sales revenue: $260,000 Cost of goods sold: $205,000 Operating expenses: $35,000 Long-term capital gains: $1,200 Section 1231 Gains: $450 Charitable contributions: $350 Municipal…
The partnership agreement of Angela and Dawn has the following provisions: 1. The partners are to earn 10 percent on the average capital. 2. Angela and Dawn are to earn salaries of $26,000 and $18,000, respectively. 3. Any remaining income or loss is to be divided between Angela and Dawn using a 70:30 ratio. Angela's average capital is $59,000 and Dawn's is $43,000. Required: Prepare an income distribution schedule assuming the income of the partnership is (a) $90,000 and (b) $28,000. If no partnership agreement exists, what does the UPA 1997 prescribe as the profit or loss distribution percentages? Note: Amounts that are to be deducted from an individual partner's capital balance should be entered with a minus sign. (a) Distribution of $90,000 income: Profit percentage Average capital Net income Interest on average capital Salary Residual income (deficit) Allocate Total (b) Distribution of $28,000 income: Angela 70 % $ 26,000 Dawn 64,100 $ 102,200 30 % $18,000 $ 5,900 $ 4,300 32,200…
Xavier and Yolonda have original investments of $50,000 and $100,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $27,000 and $18,000 respectively, and the remainder equally. How much of the net income of $40,000 is allocated to Xavier? 21. a. $20,000 b. $22,000 c. $32,000 d. $0 Moderate OBJ: LO: 12-02 DIF: PTS: 1 ANS: B KEY: Bloom's: Application NAT: BUSPROG: Analytic
For Industry H, determine each partner's share of income assuming the partners agree to share income by giving a $67,700 per year salary allowance to Price, a $126,100 per year salary allowance to Waterhouse, a $113,700 per year salary allowance to Coopers, a 15% interest on their initial capital investments, and the remaining balance shared equally. (Enter all allowances as positive values. Enter losses as negative values.) Important! Be sure to click the correct Industry at the top of the dashboard. Net income (loss) Salary allowances Balance of income (loss) Interest allowances Balance of income (loss) Balance allocated equally Balance of income (loss) Shares of each partner Initial partnership investments Net income Allocation of Partnership Income Price Total net income Total 0 Waterhouse $ $ PRICE, WATERHOUSE, AND COOPERS Statement of Partners' Equity For Year Ended December 31 Price Coopers 0 0 Waterhouse 0 0 0 $ For Industry H, prepare a statement of partners' equity for the…
Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2020, the partnership earned net income of $80,000, and Coburn made drawings of $18,000 while Webb made drawings of $24,000. (Assume the partnership income-sharing agreement calls for income to be divided 45% to Coburn and 55% to Webb. Prepare the journal entry to record the allocation of net income) What are the account titles and explanations? What is debit? What is credit?
What is the journal entry to record the formation of the partnership? Charlie and Brown form a partnership and invest the following assets and liabilities Fair Market Value Carrying Value Mary Cash $ 50,000 $50,000 Land 70,000 40,000 Dawn Cash 16,000 16,000 Building 100,000 90,000 Mortgage Payable (60,000) (60,000) Assuming that the partners will share income and losses equally, prepare the entry to record the formation of the partnership.
Xales and Yolanda have original investments of $45,500 and $110,000, respectively, in a partnership. The articles of partnership include the following provisions regard division of net income: interest of onginal investment at 20%; salary allowances of $28,400 and $29,200, respectively, and the remainder to be divided equally. How much net income of $109,700 is allocated to Yolanda? a. $51,200 b. $61,700 c. $22,000 d. $78,040

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