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#### 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 Webb, CapitalDrawingsSalaries ExpenseIncome SummaryCoburn, CapitalCash Cash    Salaries Expense    Drawings    Income Summary    Webb, Capital    Coburn, Capital Cash    Salaries Expense    Coburn, Capital    Webb, Capital    Drawings    Income Summary

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 Salaries ExpenseDrawingsWebb, CapitalIncome SummaryCashCoburn, Capital Salaries Expense    Coburn, Capital    Cash    Webb, Capital    Drawings    Income Summary Drawings    Coburn, Capital    Cash    Webb, Capital    Salaries Expense    Income Summary

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. InventoryEquipmentAccounts ReceivableCashLucas, CapitalAllowance for Doubtful AccountsAccumulated Depreciation - EquipmentNotes PayableAccounts PayableSorensen, Capital Accumulated Depreciation - EquipmentAccounts PayableSorensen, CapitalCashAccounts ReceivableNotes PayableInventoryLucas, CapitalEquipmentAllowance for Doubtful Accounts CashInventoryNotes PayableAccumulated Depreciation - EquipmentAccounts PayableLucas, CapitalAccounts ReceivableSorensen, CapitalAllowance for Doubtful AccountsEquipment Accumulated Depreciation - EquipmentInventoryAccounts ReceivableAllowance for Doubtful AccountsLucas, CapitalCashEquipmentNotes PayableAccounts PayableSorensen, Capital Equipment    Accumulated Depreciation - Equipment    Notes Payable    Accounts Payable    Lucas, Capital    Sorensen, Capital    Cash    Accounts Receivable    Inventory    Allowance for Doubtful Accounts Sorensen, Capital    Lucas, Capital    Inventory    Accumulated Depreciation - Equipment    Cash    Accounts Receivable    Notes Payable    Equipment    Allowance for Doubtful Accounts    Accounts Payable Sorensen, Capital    Inventory    Cash    Equipment    Allowance for Doubtful Accounts    Accounts Payable    Lucas, Capital    Notes Payable    Accumulated Depreciation - Equipment    Accounts Receivable Allowance for Doubtful Accounts    Sorensen, Capital    Accounts Receivable    Inventory    Notes Payable    Lucas, Capital    Accumulated Depreciation - Equipment    Equipment    Accounts Payable    Cash (Transfer of Sorensen's assets and liabilities.) 2. Accounts PayableLucas, CapitalSorensen, CapitalAccumulated Depreciation - EquipmentAllowance for Doubtful AccountsEquipmentCashNotes PayableAccounts ReceivableInventory Sorensen, CapitalAccounts ReceivableInventoryEquipmentAllowance for Doubtful AccountsNotes PayableLucas, CapitalAccounts PayableCashAccumulated Depreciation - Equipment CashEquipmentAccounts PayableLucas, CapitalNotes PayableSorensen, CapitalAccumulated Depreciation - EquipmentAllowance for Doubtful AccountsAccounts ReceivableInventory Allowance for Doubtful AccountsLucas, CapitalInventoryEquipmentAccumulated Depreciation - EquipmentCashAccounts PayableAccounts ReceivableSorensen, CapitalNotes Payable Equipment    Allowance for Doubtful Accounts    Notes Payable    Lucas, Capital    Sorensen, Capital    Accounts Payable    Inventory    Accumulated Depreciation - Equipment    Cash    Accounts Receivable Accounts Payable    Inventory    Cash    Accumulated Depreciation - Equipment    Notes Payable    Equipment    Accounts Receivable    Allowance for Doubtful Accounts    Sorensen, Capital    Lucas, Capital Allowance for Doubtful Accounts    Notes Payable    Inventory    Accounts Receivable    Cash    Equipment    Accumulated Depreciation - Equipment    Accounts Payable    Lucas, Capital    Sorensen, Capital Notes Payable    Equipment    Cash    Accounts Payable    Lucas, Capital    Sorensen, Capital    Accumulated Depreciation - Equipment    Accounts Receivable    Inventory    Allowance for Doubtful Accounts (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. Sorensen, CapitalAccounts PayableLucas, CapitalEquipmentNotes PayableCashAccumulated Depreciation - EquipmentAccounts ReceivableInventoryAllowance for Doubtful Accounts Cash    Accounts Receivable    Accumulated Depreciation - Equipment    Accounts Payable    Sorensen, Capital    Notes Payable    Inventory    Allowance for Doubtful Accounts    Lucas, Capital    Equipment (To record Sorensen's investment.) 2. InventoryAccumulated Depreciation - EquipmentSorensen, CapitalAllowance for Doubtful AccountsNotes PayableAccounts ReceivableLucas, CapitalCashAccounts PayableEquipment Equipment    Lucas, Capital    Allowance for Doubtful Accounts    Inventory    Accumulated Depreciation - Equipment    Sorensen, Capital    Cash    Accounts Receivable    Notes Payable    Accounts Payable (To record Lucas' investment.)

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