Financial Accounting
15th Edition
ISBN: 9781337272124
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 12, Problem 13E
a.
To determine
Record
b. 1
To determine
Provide journal entry
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Admitting a New LLC Member With Bonus
Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert
Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $21,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $202,000 and
$231,000, respectively.
a. Provide the journal entry for the asset revaluation. If an amount box does not require an entry, leave it blank.
Medical Equipment
21,000
Abrams, Member Equity v
8,400
Lipscomb, Member Equity V
12,600
Feedback
Check My Work
b. Provide the journal entry for the bonus under the following independent situations:
1. Lin purchased a 30% interest in Alert Medical, LLC, for $259,000. If an amount box does not require an entry, leave it blank.
Cash v
259,000
Abrams, Member Equity
20,800…
Admitting a New LLC Member With Bonus
Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $18,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $173,000 and $198,000, respectively.
a. Provide the journal entry for the asset revaluation. If an amount box does not require an entry, leave it blank.
fill in the blank df2363f53fc8ff1_2
fill in the blank df2363f53fc8ff1_3
fill in the blank df2363f53fc8ff1_5
fill in the blank df2363f53fc8ff1_6
fill in the blank df2363f53fc8ff1_8
fill in the blank df2363f53fc8ff1_9
b. Provide the journal entry for the bonus under the following independent situations:
1. Lin purchased a 30%…
Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $37,400. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $151,000 and $218,800, respectively.
Required:a. On December 31, provide the journal entry for the asset revaluation. Refer to the chart of accounts for the exact wording of the account titles. CNOW journals do not use lines for journal explanations. Every line on a journal page is used for debit or credit entries. CNOW journals will automatically indent a credit entry when a credit amount is entered.
b. On December 31, provide the journal entry for the bonus under the following independent situations (refer to the chart of accounts for the exact…
Chapter 12 Solutions
Financial Accounting
Ch. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQ
Ch. 12 - Prob. 1PEACh. 12 - Prob. 1PEBCh. 12 - Prob. 2PEACh. 12 - Prob. 2PEBCh. 12 - Prob. 3PEACh. 12 - Prob. 3PEBCh. 12 - Prob. 4PEACh. 12 - Prob. 4PEBCh. 12 - Prob. 5PEACh. 12 - Liquidating partnerships Prior to liquidating...Ch. 12 - Prob. 6PEACh. 12 - Prob. 6PEBCh. 12 - Revenue per employee Niles and Cohen, CPAs earned...Ch. 12 - Prob. 7PEBCh. 12 - Prob. 1ECh. 12 - Prob. 2ECh. 12 - Prob. 3ECh. 12 - Prob. 4ECh. 12 - Prob. 5ECh. 12 - Prob. 6ECh. 12 - Prob. 7ECh. 12 - Prob. 8ECh. 12 - Prob. 9ECh. 12 - Prob. 10ECh. 12 - Prob. 11ECh. 12 - Prob. 12ECh. 12 - Prob. 13ECh. 12 - Prob. 14ECh. 12 - Prob. 15ECh. 12 - Prob. 16ECh. 12 - Statement of members equity, admitting new member...Ch. 12 - Distribution of cash upon liquidation Hewitt and...Ch. 12 - Distribution of cash upon liquidation David Oliver...Ch. 12 - Liquidating partnershipscapital deficiency Lewis,...Ch. 12 - Prob. 21ECh. 12 - Prob. 22ECh. 12 - Statement of partnership liquidation After closing...Ch. 12 - Prob. 24ECh. 12 - Prob. 25ECh. 12 - Revenue per professional staff The accounting firm...Ch. 12 - Prob. 27ECh. 12 - Prob. 1PACh. 12 - Prob. 2PACh. 12 - Prob. 3PACh. 12 - Prob. 4PACh. 12 - Statement of partnership liquidation After the...Ch. 12 - Prob. 6PACh. 12 - Prob. 1PBCh. 12 - Prob. 2PBCh. 12 - Prob. 3PBCh. 12 - Prob. 4PBCh. 12 - Statement of partnership liquidation After the...Ch. 12 - On August 3, the firm of Chapelle, Rock, and Pryor...Ch. 12 - Prob. 1CPCh. 12 - Prob. 3CPCh. 12 - Prob. 4CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $40,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were$154,000 and $208,000, respectively.a. Provide the journal entry for the asset revaluation.b. Provide the journal entry for the bonus under the following independent situations:1. Lin purchased a 30% interest in Alert Medical, LLC, for $228,000.2. Lin purchased a 25% interest in Alert Medical, LLC, for $124,000.arrow_forwardAdmitting a New LLC Member With Bonus Alert Medical, LLC, consists of two doctors, Abrams and Lipscomb, who share in all income and losses according to a 2:3 income-sharing ratio. Dr. Lin has been asked to join the LLC. Prior to admitting Lin, the assets of Alert Medical were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by $20,000. Prior to the revaluation, the equity balances for Abrams and Lipscomb were $192,000 and $220,000, respectively. a. Provide the journal entry for the asset revaluation. If an amount box does not require an entry, leave it blank. Medical Equipment fill in the blank 2ad938f58fb4044_2 fill in the blank 2ad938f58fb4044_3 Abrams, Member Equity fill in the blank 2ad938f58fb4044_5 fill in the blank 2ad938f58fb4044_6 Lipscomb, Member Equity fill in the blank 2ad938f58fb4044_8 fill in the blank 2ad938f58fb4044_9 b. Provide the journal entry for the bonus under the…arrow_forwardAdmission by Investment of Assets Rizal Meds is a medical partnership of Dr. John Pete Sarabla and Dr. Angeles De Guzman, who share profits and losses in a 2:3 ratio. Dr. Elizabeth Salvador has been asked to join the partnership. Prior to admitting Salvador, the assets of Rizal Meds were revalued to reflect their current market values. The revaluation resulted in medical equipment being increased by P35,000 Prior to the revaluation, the equity balances for Sarabia and De Guzman were P201,000 and P289,000, respectively. Required: 1 Prepare the journal entry for the asset revaluation 2. Prepare the journal entry to record the admission under the following independent situations: a.Salvador invested P285,000 for a 30% interest in Rizal Meds b. Salvador invested P155,000 for a 25% interest in Rizal Meds.arrow_forward
- AA and DD created a partnership to own and operate a health food store. The partnershipagreement provided that AA receive a salary of 10,000 and DD a salary of 5,000 to recognize theyrelative time spent in operating the store. Remaining profits and losses were divided 60:40 to AA andDD respectively. Income for 2020, the first year of operations, of 13,000 was allocated 8,800 to AAand 4,200 to DD. On January 1, 2021, the partnership agreement was changed to reflect the fact thatDD could no longer devote any time to the store’s operations. The new agreement allows AA a salary of 18,000 and the remaining profits and losses are divide equally. In 2021, an error wasdiscovered such that the 2020 reported income was understated by 4,000. The partnership income of25,000 for 2021 included the 4,000 related to year 2020. In the reported net income of 25,000 for theyear 2021, AA and DD would have? a. 21,900;3,100b. 17.100;17.100c. 0; 0d. 12,500; 12,500arrow_forwardNN and OO created a partnership to own and operate a health- food store. The partnership agreement provided that NN receive a salary of 100,000 and OO a salary of 50,000 to recognize their relative time spent in operating the store. Remaining profits and losses were divided 60:40. Income for 2018, the first year of operations, of 130,000 was allocated as 88,000 to NN and 42,000 to OO. On January 1, 2019, the partnership agreement was changed to reflect the fact that OO could no longer devote any time to the store’s operation. The new agreement allows NN a salary of 180,000 and the remaining profit or loss be allocated equally. During 2019, an error was discovered such that the 2018 net income reported was understated by 40,000. The partnership income for 2019 including the 40,000 error was 250,000. Allocate the 250,000 to the partners.arrow_forwardAA, BB and Cc are partners with average capital balances during 2021 of 360,000, 180,000 and120,000 respectively. Partners receive 10% interest on their average capital balances. After deductingsalaries of 90,000 to AA and 60,000 to CC the residual profit or loss is divided equally. In 2021, thepartnership sustained a 99,000 loss before interest and salaries to partners. By what amount shouldAA’s capital account change?a. 21,000 increaseb. 33,000 decreasec. 105,000 decreased. 126,000 increasearrow_forward
- Lopez and Gomez are members in an LLC that reports net income of $139,000. An agreement states that Lopez receives a $20,900 salary allowance and Gomez receives a $50,900 salary allowance. Any remaining income or loss is to be shared by Lopez and Gomez in a 2:3 ratio (in percents: Lopez, 40%; Gomez, 60%). 1. Determine each member's share of net income. 2. Prepare the entry to record the closing of Income Summary. Hint: The business is a limited liability company (LLC), so equity accounts are "Lopez, Member Equity" and "Gomez, Member Equity". Complete this question by entering your answers in the tabs below. Required 1 Required 2 Determine each member's share of net income. Allocation of each member's Income Lopez Gomez Net income Salary allowances Balance of income Balance allocated Balance of income Shares of the membersarrow_forwardOn October 1, 2024, Apollo, Brett, and Clark formed the A, B and C partnership. Apollo contributed $27,300; Brett, $42,900; and Clark, $59,800. Apollo will manage the store; Brett will work in the store three-quarters of the time; and Clark will not work in the business. Read the requirements LOADING... . Requirement 1. Compute the partners' shares of profits and losses under each of the following plans: a. Net loss for the year ended September 30, 2025, is $55,000, and the partnership agreement allocates 70% of profits to Apollo, 15% to Brett, and 15% to Clark. The agreement does not discuss the sharing of losses. (Use parentheses or a minus sign for loss amounts. Complete all answer boxes. For amounts that are $0, make sure to enter "0" in the appropriate cell.) A, B and C Allocation of Profits and Losses Apollo Brett Clark Total a. Net income (loss) Capital allocation:…arrow_forwardEEE has been very successful in operating his business for the last five years. His financial statements showed total assets of P380,000 and liabilities of P50,000. He invited FFF to join him by investing an amount enough to give him a 30% interest in the firm. Profit and loss agreement provides 80:20 to EEE and FFF, respectively. Before the formation, the parties agreed to make the following adjustments in the books of EEE:· Allowance for doubtful accounts amounting to P10,000 be established.· The merchandise should be adjusted to include goods out on consignment amounting to P25,000.· Accrued utilities of P2,500 be recognized.How much is the amount to be invested by FFF?arrow_forward
- The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $19,000, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G&P partnership reports the following results: Sales revenue $ 83,200 Gain on sale of land (§1231) 6,300 Cost of goods sold (40,700) Depreciation—MACRS (16,600) Employee wages (16,600) Cash charitable contributions (3,400) Municipal bond interest 5,600 Other expenses (4,800) Note: Negative amounts should be indicated by a minus sign. Required: a-1. How much ordinary income (loss) is allocated to Gary for the year? a-2. Compute Gary's share of separately stated items to be reported on his year 1 Schedule K-1, including his self-employment income (loss). b. Compute Gary's share of self-employment income (loss) to be reported on his year 1 Schedule K-1, assuming G&P is a limited partnership and Gary is a limited partner. PLEASE…arrow_forwardJennifer has been very successful in operating her business for the last five years. Her financial statements showed total assets of P380,000 and liabilities of P30,000. She invited Nicole to join her by investing an amount enough to give her a 40% interest in the firm. Profit and loss agreement provides 60:40 to Jennifer and Nicole, respectively. Before the formation, the parties agreed to make the following adjustments in the books of Jennifer: > Allowance for doubtful accounts amounting to P5,000 be established. > The merchandise should be adjusted to include goods out on consignment amounting to P20,000. > Accrued utilities be recognized, P5,000. The amount to be invested by Nicole isarrow_forwardAlpha, Beta and Gamma were in partnership, sharing profits in the ratio of their fixed capitals On July 1, 2020 the partnership was dissolved, and Gamma took over a vehicle valued at $45,000. Creditors were paid $288,000 in full settlement, while debtors were allowed a discount of $15,000. The loan was repaid in full. Legal and accounting costs associated with the dissolution amounted to $55,000. $ $ Non-Current Assets Equipment 925,000 Motor vehicles 162,500 Current assets 1,087,500 Inventory 465,000 Receivables 232,500 Bank 60,000 Total current assets 757,500 Total assets 1,845,000 Financed by: Capital accounts Alpha 765,000 Beta 255,000 Gamma 255,000 1,275,000 Current accounts Alpha 60,000 Beta 40,000 Gamma 20,000 120,000 Long-term liability…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
