Coburn (beginning capital, $60,000) and Webb (beginning capital $90,000) are partners. During 2014, the partnership earned net income of $80,000, and Coburn made drawings of $18,000 while Webb made drawings of $24,000. Instructions (a)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. (b)Assume the partnership […]

Terry, Nick, and Frank are forming The Doctor Partnership. Terry is transferring $30,000 of personal cash and equipment worth $25,000 to the partnership. Nick owns land worth $28,000 and a small building worth $75,000, which he transfers to the partnership. There is a long-term mortgage of $20,000 on the land and building, which the partnership assumes. Frank transfers cash of $7,000, accounts receivable of $36,000, […]

Data for Sedgwick Company are presented, Sedgwick Company at December 31 has cash $20,000, noncash assets $100,000, liabilities $55,000, and the following capital balances: Floyd $45,000 and DeWitt $20,000. The firm is liquidated, and $105,000 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 60% and 40%, respectively. Instructions Prepare the entries to record: (a)The sale of noncash assets. (b)The […]

Prior to the distribution of cash to the partners, the accounts in the VUP Company are: Cash $24,000; Vogel, Capital (Cr.) $17,000; Utech, Capital (Cr.) $15,000; and Pena, Capital (Dr.) $8,000. The income ratios are 5:3:2, respectively. Instructions (a)Prepare the entry to record (1) Pena”s payment of $8,000 in cash to the partnership and (2) the distribution of cash to the partners with credit balances. […]

N. Essex, C. Gilmore, and C. Heganbart have capital balances of $50,000, $40,000, and $30,000, respectively. Their income ratios are 5:3:2. Heganbart withdraws from the partnership under each of the following independent conditions. Essex and Gilmore agree to purchase Heganbart”s equity by paying $17,000 each from their personal assets. Each purchaser receives 50% of Heganbart”s equity. Gilmore agrees to purchase all of Heganbart”s equity by […]

B. Higgins, J. Mayo, and N. Rice have capital balances of $95,000, $75,000, and $60,000, respectively. They share income or loss on a 5:3:2 basis. Rice withdraws from the partnership under each of the following conditions. Rice is paid $64,000 in cash from partnership assets, and a bonus is granted to the retiring partner. Rice is paid $52,000 in cash from partnership assets, and bonuses […]

At the end of its first year of operations on December 31, 2014, NBS Company”s accounts show the following. Partner Drawings Capital Art Niensted $23,000 $48,000 Greg Bolen 14,000 30,000 Krista Sayler 10,000 25,000 The capital balance represents each partner”s initial capital investment. Therefore, net income or net loss for 2014 has not been closed to the partners’ capital accounts. Instructions (a)Journalize the entry to […]

The partners in Crawford Company decide to liquidate the firm when the balance sheet shows the following. CRAWFORD COMPANY Balance Sheet May 31, 2014 Assets Liabilities and Owners” Equity Cash $ 27,500 Notes payable $ 13,500 Accounts receivable 25,000 Accounts payable 27,000 Allowance for doubtful accounts (1,000) Salaries and wages payable 4,000 Inventory 34,500 A. Jamison, capital 33,000 Equipment 21,000 S. Moyer, capital 21,000 Accumulated […]

At April 30, partners’ capital balances in PDL Company are: G. Donley $52,000, C. Lamar $48,000, and J. Pinkston $18,000. The income sharing ratios are 5:4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner. Instructions (a)Journalize the admission of Terrell under each of the following independent assumptions. (1)Terrell purchases 50% of Pinkston”s ownership interest […]

Which of the following jobs away from home is a temporary assignment for the entire time the taxpayer is at the job? a. Correct. A temporary assignment must be one that is expected to last one year or less and in fact ends within this period. b. Incorrect. Even though the job is expected to last no more than one year, it is not temporary […]