Answered: The ABC partnership is a cash-basis,…

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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The ABC partnership is a cash-basis, calendar-year partnership. A sells his 1/3 interest to D on September 31. Revenue to the partnership is $4,500 per month, and expenses are $1,200 per month, except for (1) rent expense for the period from November 1 of this year to October 31 of next year in the amount of $6,000, was paid on October 15, (2) real estate taxes for the period from November 1 of this year to October 31 of next year in the amount of $9,000, was paid on November 1, and (3) a long term capital gain of $15,000 from the sale of property on December 1. How much income and expenses would A be allocated under the interim closing method?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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