Reference no: EM131976649
Advanced Accounting Assigned Problem 1 -
a) Fox, George, and Hayes form a partnership on 1-1-20X1. Fox contributes cash of $40,000 and equipment with a book value to Fox of $8,000 and a fair market value of $10,000. George contributes cash of $25,000 and equipment with a book value to George of $30,000 and a fair market value of $25,000. Hayes contributes $5,000 of cash and equipment with a book value to Hayes of $15,000 and a fair market value of $20,000.
Prepare the entry for the admission of the partners to the new partnership.
b) Fox, George, and Hayes partnership agree states the following regarding the allocation of net income:
- Interest on beginning of the year capital balances is 5 percent.
- A bonus is to be allocated to George computed as 10 percent of income after the bonus and in excess of $50,000 (George's name is important to the partnership - thus the bonus)
- A salary of $40,000 is to be allocated to Fox (Fox is the only partner working in the partnership).
- Any remaining income is to be allocated 20 percent to Fox, 60 percent to George, and 20 percent to Hayes.
Compute how much of the $90,000 of partnership income for year 20X1 is to be allocated to each partner.
Advanced Accounting Assigned Problem 2 -
The Roe, Soh, and Tow Partnership earned $150,000 of net income for the year. The partnership agreement states the following regarding the allocation of net income:
- Salary to Roe of $40,000; Salary to Soh of $60,000, Salary to Tow of $50,000
- Interest on average capitals - the interest amounts are computed as $3,000 to Roe, $4,200 to Soh, and $4,800 to Tow.
- Any remaining income is to be allocated 25 percent to Roe, 40 percent to Soh, and 35% to Tow.
Show the entry made to close income summary to partner capital.