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ACC 206 Week 3 Homework Chapter 12

ACC 206 Week 3 Homework Chapter 12

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ACC 206 Week 3 Homework Chapter 12 -

Brief Exercise 12-2

Penner and Torres decide to merge their proprietorships into a partnership called Pentor Company. The balance sheet of Torres Co. shows:

Accounts receivable

 

$17,700

   

Less: Allowance for doubtful accounts

 

1,239

 

$16,461

Equipment

 

59,900

   

Less: Accumulated depreciation—equip.

 

20,965

 

38,935

The partners agree that the net realizable value of the receivables is $14,868 and that the fair value of the equipment is $32,945. Indicate how the accounts should appear in the opening balance sheet of the partnership.

 

Brief Exercise 12-4

PFW Co. reports net income of $63,900. Partner salary allowances are Pitts $16,080, Filbert $6,800, and Witten $6,210. Indicate the division of net income to each partner, assuming the income ratio is 60 : 20 : 20, respectively.

 

Brief Exercise 12-6

After liquidating noncash assets and paying creditors, account balances in the Mann Co. are Cash $19,690, A Capital (Cr.) $8,810, B Capital (Cr.) $6,330, and C Capital (Cr.) $4,550. The partners share income equally.

Journalize the final distribution of cash to the partners. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Exercise 12-1

Mark Rensing has prepared the following list of statements about partnerships.

Identify each statement as true or false.

 

Exercise 12-5 (Part Level Submission)

Coburn (beginning capital, $59,300) and Webb (beginning capital $88,600) are partners. During 2014, the partnership earned net income of $74,500, and Coburn made drawings of $17,790 while Webb made drawings of $23,510.

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. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

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Assume the partnership income-sharing agreement calls for income to be divided with a salary of $30,600 to Coburn and $25,800 to Webb, with the remainder divided 45% to Coburn and 55% to Webb. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

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Assume the partnership income-sharing agreement calls for income to be divided with a salary of $40,400 to Coburn and $35,500 to Webb, interest of 12% on beginning capital, and the remainder divided 50%–50%. Prepare the journal entry to record the allocation of net income. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

 

Exercise 12-8

Sedgwick Company at December 31 has cash $20,138, noncash assets $106,200, liabilities $54,680, and the following capital balances: Floyd $45,920 and DeWitt $25,738. The firm is liquidated, and $115,200 in cash is received for the noncash assets. Floyd and DeWitt income ratios are 65% and 35%, respectively.

Prepare a schedule of cash payments. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).)

 

Problem 12-1A (Part Level Submission)

The post-closing trial balances of two proprietorships on January 1, 2014, are presented below.

   

Sorensen Company

 

Lucas Company

   

Dr.

 

Cr.

 

Dr.

 

Cr.

Cash

 

$14,060

     

$11,720

   

Accounts receivable

 

17,170

     

25,840

   

Allowance for doubtful accounts

     

$3,130

     

$4,050

Inventory

 

26,060

     

18,780

   

Equipment

 

45,490

     

28,770

   

Accumulated depreciation—equipment

     

24,380

     

11,000

Notes payable

     

17,840

     

15,180

Accounts payable

     

21,790

     

30,870

Sorensen, capital

     

35,640

       

Lucas, capital

             

24,010

   

$102,780

 

$102,780

 

$85,110

 

$85,110

 

Sorensen and Lucas decide to form a partnership, Solu Company, with the following agreed upon valuations for noncash assets.

                       

   

Sorensen Company

 

Lucas Company

Accounts receivable

 

$17,170

 

$25,840

Allowance for doubtful accounts

 

4,020

 

4,030

Inventory

 

27,900

 

19,880

Equipment

 

24,580

 

15,770

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Sorensen will invest an additional $5,290 in cash, and Lucas will invest an additional $22,220 in cash.

(a) Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

1.

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(Transfer of Sorensen's assets and liabilities.)

   

2.

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(Transfer of Lucas' assets and liabilities.)

   

             

  (b) Journalize the additional cash investment by each partner. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No.

Account Titles and Explanation

Debit

Credit

1.

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(To record Sorensen's investment.)

   

2.

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(To record Lucas' investment.)

   

 

 

Prepare a classified balance sheet for the partnership on January 1, 2014. (List Current Assets in order of liquidity.)

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