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Journalize all of the transactions for the partnership
Course:- Accounting Basics
Reference No.:- EM132337081

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Assignment Help >> Accounting Basics

Accounting Problems -

Problem 1 - Sheila Sasso, Karen Schwimmer, and Jim Perry have formed a partnership. Sasso invested \$60,000, Schwimmer \$120,000, and Perry \$180,000. Sasso will manage the store, Schwimmer will work in the store three-quarters of the time, and Perry will not work in the business.

Required -

1. Compute the partners' shares of profits and losses under each of the following plans:

a. Net loss is \$70,500, and the partnership agreement allocates 45 percent of profits to Sasso, 35 percent to Schwimmer, and 20 percent to Perry. The agreement does not discuss the sharing of losses.

b. Net income for the year is \$136,500. The first \$45,000 is allocated on the basis of partners' Capital investments. The next \$75,000 is based on service, with \$45,000 going to Sasso and \$30,000 going to Schwimmer. Any remainder is shared equally.

c. Net loss for the year is \$136,500. The first \$45,000 is allocated on the basis of partners' Capital investments. The next \$75,000 is based on service, with \$45,000 going to Sasso and \$30,000 going to Schwimmer. Any remainder is shared equally.

2. Revenues for the year were \$858,000 and expenses were \$721,500. Under plan (b), prepare the partnership income statement for the year. Assume a year end of September 30, 2017.

3. How will what you have learned in this problem help you manage a partnership?

Problem 2 - Vector Financial Planning is a partnership owned by three individuals. The partners share profits and losses in the ratio of 20 percent to Katherine Depatie, 40 percent to Sam Seamus, and 40 percent to Emily Hudson. At December 31, 2017, the firm has the following balance sheet amounts:

 Cash \$350,400 Total liabilities \$573,000 Accounts receivable \$92,400 Less: Allowance for uncollectibles 16,800 75,600 Building 1,102,000 Katherine Depatie, capital 390,600 Less: Accumulated Sam Seamus, capital 210,000 Amortization 294,000 808,000 Emily Hudson, capital 260,400 Land 200,00 Total liabilities and capital \$1,434,000 Total assets \$1,434,000

Seamus withdraws from the partnership on December 31, 2017, to establish his own consulting practice.

Required - Record Seamus's withdrawal from the partnership under the following independent plans:

a. In a personal transaction, Seamus sells his equity in the partnership to Rea Pearlman, who pays Seamus \$120,000 for one-half of his interest. Depatie and Hudson agree to accept Pearlman as a partner.

b. The partnership pays Seamus cash of \$163,000 and gives him a note payable for the remainder of his book equity in settlement of his partnership interest.

c. The partnership pays Seamus cash of \$336,000.

d. The partners agree that the building is worth \$682,000 (net). After the revaluation, the partnership settles with Seamus by giving him cash of \$82,000 and a note payable for the remainder of his book equity.

Problem 3 -

2014

Jun. 10 Steven Hodgson and Sarah Asham have agreed to pool their assets and form a partnership to be called H&A Distributors. They agree to share all profits equally and make the following initial investments:

 Hodgson Asham Cash \$21,000 \$36,000 Accounts receivable (net) 42,000 21,000 Office furniture (net) 48,000 27,000

Dec. 31 The partnership's reported net income was \$228,000 for the year.

2015

Jan. 1 Hodgson and Asham agree to accept Myra Sirroca into the partnership with a \$210,000 investment for 40 percent of the business. The partnership agreement is amended to provide for the following sharing of profits and losses:

 Hodgson Asham Sirroca Service \$120,000 \$90,000 \$80,000 Interest on end-of-period capital balance 10% 10% 10% Balance in ratio of 2: 3: 5

Dec. 31 The partnership's reported net income is \$570,000.

2016

Oct. 10 Hodgson withdrew \$90,000 cash from the partnership and Asham withdrew \$60,000 (Sirroca did not make any withdrawals).

Dec. 31 The partnership's reported net income is \$225,000.

2017

Jan. 2 After a disagreement as to the direction in which the partnership should be moving, Sirroca decided to withdraw from the partnership. The three Partners agreed that Sirroca could take cash of \$510,000 in exchange for her equity in the partnership.

Required -

1. Journalize all of the transactions for the partnership.

2. Prepare the partners' equity section of the balance sheet as of January 2, 2017.

Problem 4 - William Dione, Julie Porter, and Regina Westlake started a partnership to operate a courier service. The partnership (DP&W Couriers) had the following transactions:

2015

Jan. 2 Dione, Porter, and Westlake formed the partnership by signing an' agreement that stated that all profits would be shared in a 2:3:5 ratio and by making the following investments:

 Dione Porter Westlake Cash \$12,000 \$8,000 \$14,000 Accounts receivable (net) 20,000 14,500 60,000 Office furniture (net) 0 0 15,000 Vehicles (net) 21,000 38,500 0

Dec. 31 The partnership reported net income of \$53,500 for the year.

2016

Jun. 7 Dione and Westlake agreed that Porter could sell her share of the partnership to Ray Ewing for \$82,500. The new partners agreed to keep the same profit-sharing arrangement (2:3:5 for Dione:Ewing:Westlake).

Dec. 31 The partnership reported a net loss of \$67,000 for the year.

2017

Jan. 3 The partners agreed to liquidate the partnership. On this date, the balance sheet showed the following items (all accounts have their normal balances):

 Cash \$17,500 Accounts receivable 316,000 Allowance for uncollectible accounts 22,500 Office furniture 74,500 Vehicles 240,000 Accumulated amortization (total) 49,500 Accounts payable 386,500 The assets were sold for the following amounts: Accounts receivable \$190,000 Office furniture 82,500 Vehicles 106,000

Dione and Ewing both have personal assets, but Westlake does not.

Required - Journalize all of the transactions for the partnership.

Attachment:- Template.rar

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