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 […]

On December 31, the capital balances and income ratios in TEP Company are as follows. Partner Capital Balance Income Ratio Brayer $60,000 50% Emig 40,000 30% Posada 30,000 20% Instructions (a)Journalize the withdrawal of Posada under each of the following assumptions. (1)Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Posada”s ownership equity. Each receives 50% of Posada”s […]

Penner and Torres decide to merge their proprietorships into a partnership called Pentor Company. The balance sheet of Torres Co. shows: Accounts receivable $16,000 Less:Allowance for doubtful accounts 1,200 $14,800 Equipment 20,000 Less:Accumulated depreiciation-equip 7,000 13,000 The partners agree that the net realizable value of the receivables is $14,500 and that the fair value of the equipment is $11,000. Indicate how the accounts should appear […]

The post-closing trial balances of two proprietorships on January 1, 2014, are presented below. Cash Accounts receivable Utech Company Flott Company $ 10,000 18,000 $ 8,000 30,000 Allowance for doubtful accounts $2,000 $ 3,000 Inventory 35,000 20,000 Equipment 60,000 35,000 Accumulated depreciation—equipment 28,000 15,000 Notes payable 20,000 Accounts payable 30,000 40,000 Utech, capital 43,000 Flat, capital 35,000 $123,000 $123,000 $93,000 $93,000 Utech and Flott decide […]

Indicate whether each of the following statements is true or false. Each partner is personally and individually liable for all partnership liabilities. If a partnership dissolves, each partner has a claim to the specific assets he/she contributed to the firm. In a limited partnership, all partners have limited liability. A major advantage of regular partnership is that it is simple and inexpensive to create and […]