
Concept explainers
1.
It is that form of organization which is owned and managed by two or more persons who invest and share the
To record: The
1.

Answer to Problem 12.4BPR
The journal entries as of August 31 is as follows:
Date | Account Titles and Explanation | Debit ($) | Credit ($) | |
Aug. | 31 | Asset Revaluations | $1,800 | |
|
$1,500 | |||
Allowance for Doubtful Accounts (1) | $300 | |||
(To record the loss on revaluation of assets.) | ||||
31 | Merchandise Inventory | $4,300 | ||
Asset Revaluations (2) | $4,300 | |||
(To record the profit on revaluation of merchandise inventory.) | ||||
31 | $15,500 | |||
Equipment (3) | $3,000 | |||
Asset Revaluations | $12,500 | |||
(To record the profit on revaluation of equipment.) | ||||
31 | Asset Revaluations (Revaluation profit) (4) | $15,000 | ||
C, Capital (1/2) | $7,500 | |||
E, Capital (1/2) | $7,500 | |||
(To record the division of revaluation profit between Partner C and E.) |
Table (1)
Explanation of Solution
Working Notes:
Calculation of Allowances for Doubtful Accounts –
Allowance for doubtful debt is to be increased to 5% of the remaining account.
Old Balance = $600
Calculation of Merchandise Inventory-
Book value of Merchandise Inventory = $42,500
Revalued Merchandise Inventory = $46,800
Calculation of Equipment-
Book value of Merchandise Inventory = $64,500
Revalued Merchandise Inventory = $67,500
Calculation of Revaluation Profit –
2.
To record: The additional journal entries for the entrance of partner M into the Partnership.
2.

Explanation of Solution
The additional journal entries for the entrance of partner M into the Partnership is as follows:
Date | Account Titles and Explanation | Debit ($) | Credit ($) | |
Sep | 1 | E, Capital | $26,000 | |
M, Capital | $26,000 | |||
(To record the purchase of 26,000 of ownership interest of partner E, by partner M.) | ||||
1 | Cash | $32,000 | ||
M, Capital | $32,000 | |||
(To record the cash brought by partner M to the partnership firm.) |
Table (2)
3.
To prepare: The
3.

Answer to Problem 12.4BPR
The balance sheet for the new partnership as of September 1, 2016 is as follows.
C, E, and M | |||
Balance Sheet | |||
September 1, 2016 | |||
Assets | |||
Current assets: | |||
Cash (5) | $44,300 | ||
Accounts receivable | $18,000 | ||
Less allowance for doubtful accounts | $900 | $17,100 | |
Merchandise inventory | $46,800 | ||
Prepaid insurance | $1,200 | ||
Total current assets | $109,400 | ||
Property, plant, and equipment: | |||
Equipment | $64,500 | ||
Total assets | $173,900 | ||
Liabilities | |||
Current liabilities: | |||
Accounts payable | $8,900 | ||
Notes payable | $15,000 | ||
Total liabilities | $23,900 | ||
Partners’ Equity | |||
C, capital (6) | $62,500 | ||
E, capital (7) | $29,500 | ||
M, capital | $58,000 | ||
Total partners’ equity | $150,000 | ||
Total liabilities and partners’ equity | $173,900 |
Table (3)
Explanation of Solution
Working Notes:
Calculation of Cash Balance –
Calculation of Capital Balance of C –
Calculation of Capital Balance of E–
Want to see more full solutions like this?
Chapter 12 Solutions
Working Papers, Chapters 1-17 for Warren/Reeve/Duchac's Accounting, 26th and Financial Accounting, 14th
- provide answer of this General accounting questionarrow_forwardOn January 1, 2024, Packard Corporation leased equipment to Hewlitt Company. The lease term is 9 years. The first payment of $457,000 was made on January 1, 2024. Remaining payments are made on December 31 each year, beginning with December 31, 2024. The equipment cost Packard Corporation $2,956,548. The present value of the lease payments is $2,986,412. The lease is appropriately classified as a sales-type lease. Assuming the interest rate for this lease is 9%, what will be the balance reported as a liability by Hewlitt in its balance sheet on December 31, 2025?arrow_forwardWhat is the cost of goods sold on these financial accounting question?arrow_forward
- Nicole organized a new corporation. The corporation began business on April 1 of year 1. She made the following expenditures associated with getting the corporation started: Expense Date Amount Attorney fees for articles of incorporation February 10 $ 40,500 Stock issuance costs March 1-March 30 wages March 1-March 30 rent April 1-May 30 wages Note: Leave no answer blank. Enter zero if applicable. March 30 6,550 March 30 2,850 April 1 May 30 24,000 16,375 b. What amount of the start-up costs and organizational expenditures may the corporation immediately expense in year 1 (excluding the portion of the expenditures that are amortized over 180 months)? Start-up costs expensed Organizational expenditures expensedarrow_forwardGeneral accountingarrow_forwardAfter several profitable years running her business, Ingrid decided to acquire the assets of a small competing business. On May 1 of year 1, Ingrid acquired the competing business for $354,000. Ingrid allocated $59,000 of the purchase price to goodwill. Ingrid's business reports its taxable income on a calendar-year basis. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. a. How much amortization expense on the goodwill can Ingrid deduct in year 1, year 2, and year 3? Year 1 Deductible Amortization Expense Year 2 Year 3arrow_forward
- Chapter 19 Homework 15 0.87 points eBook Saved Exercise 19-20 (Algo) Contribution margin ratio by sales territory LO A1 Help Save & Exit Submit Check my work Big Bikes manufactures and sells mountain bikes in two sales territories, West Coast and East Coast. Information for the year follows. The company sold 550 bikes in each territory. Per unit Sales price Variable cost of goods sold West Coast $ 1,500 East Coast $ 1,440 830 70 830 Variable selling and administrative expenses 160 Ask a. Compute contribution margin (in dollars) for each sales territory. b. Compute contribution margin ratio for each sales territory. Which sales territory has the better contribution margin ratio? Print Complete this question by entering your answers in the tabs below. References Required A Required B Compute contribution margin (in dollars) for each sales territory. Sales Variable expenses Variable cost of goods sold Variable selling and administrative expenses Contribution margin West Coast East Coast…arrow_forwardChapter 19 Homework 15 0.87 points eBook Saved Exercise 19-20 (Algo) Contribution margin ratio by sales territory LO A1 Help Save & Exit Submit Check my work Big Bikes manufactures and sells mountain bikes in two sales territories, West Coast and East Coast. Information for the year follows. The company sold 550 bikes in each territory. Per unit Sales price Variable cost of goods sold West Coast $ 1,500 East Coast $ 1,440 830 70 830 Variable selling and administrative expenses 160 Ask a. Compute contribution margin (in dollars) for each sales territory. b. Compute contribution margin ratio for each sales territory. Which sales territory has the better contribution margin ratio? Print Complete this question by entering your answers in the tabs below. References Required A Required B Compute contribution margin (in dollars) for each sales territory. Sales Variable expenses Variable cost of goods sold Variable selling and administrative expenses Contribution margin West Coast East Coast…arrow_forwardDetermine the gross margin of this financial accounting questionarrow_forward
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage

