ces Gorman and Morton form a partnership on May 1, 2022. Gorman contributes cash of $73,000; Morton conveys title to the following properties to the partnership: Equipment Licensing agreements Book Value $ 26,500 46,500 Fair Value $51,000 59,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Gorman receives a compensation allowance of $1,300 per month. All remaining profits and losses are split 40.60 between Gorman and Morton, respectively. Each partner can make annual cash drawings of $5,000 beginning in 2023. Net income of $22,500 is earned by the business during 2022. Steele is invited to join the partnership on January 1, 2023. Because of her business reputation and financial expertise, she is given a 40 percent interest for $77,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Steele a $4,000 compensation allowance per month and an annual cash drawing of $10,000. Remaining profits are now allocated: Gorman Morton Steele 15% 45 40 All drawings are taken by the partners during 2023. At year-end, the partnership reports net income of $130,000. On January 1, 2024, Frank (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Frank, who makes the following payments directly to the partners: Gorman Morton Steele $ 11,298 10,204 17,756 Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Frank to a compensation allowance of $700 per month and an annual drawing of $3,000. Profits and losses are now assigned as follows: Gorman Morton Steele Frank 13.0% 41.0 36.0 10.0 For the year of 2024, the partnership earned a profit of $54,800, and each partner withdrew the allowed amount of cash Required: Prepare schedules that determine the capital balances for the individual partners as of the end of each year 2022 through 2024. Complete this question by entering your answers in the tabs below. Ending Capital Ending Capital Ending Capital Balance 2022 Balance 2023 Balance 2024 Prepare a schedule that determines the ending capital balance for each partner as of the end of 2022. GORMAN and MORTON Statement of Partners' Capital For the Year Ending December 31, 2022 Beginning balances Net income allocation Drawings Ending balances Gorman Morton Total Ending Capital Balance 2072 Ending Capital Balance 2023 >

ces Gorman and Morton form a partnership on May 1, 2022. Gorman contributes cash of $73,000; Morton conveys title to the following properties to the partnership: Equipment Licensing agreements Book Value $ 26,500 46,500 Fair Value $51,000 59,000 The partners agree to start their partnership with equal capital balances. No goodwill is to be recognized. According to the articles of partnership written by the partners, profits and losses are allocated based on the following formula: Gorman receives a compensation allowance of $1,300 per month. All remaining profits and losses are split 40.60 between Gorman and Morton, respectively. Each partner can make annual cash drawings of $5,000 beginning in 2023. Net income of $22,500 is earned by the business during 2022. Steele is invited to join the partnership on January 1, 2023. Because of her business reputation and financial expertise, she is given a 40 percent interest for $77,000 cash. The bonus approach is used to record this investment, made directly to the business. The articles of partnership are amended to give Steele a $4,000 compensation allowance per month and an annual cash drawing of $10,000. Remaining profits are now allocated: Gorman Morton Steele 15% 45 40 All drawings are taken by the partners during 2023. At year-end, the partnership reports net income of $130,000. On January 1, 2024, Frank (previously a partnership employee) is admitted into the partnership. Each partner transfers 10 percent to Frank, who makes the following payments directly to the partners: Gorman Morton Steele $ 11,298 10,204 17,756 Once again, the articles of partnership must be amended to allow for the entrance of the new partner. This change entitles Frank to a compensation allowance of $700 per month and an annual drawing of $3,000. Profits and losses are now assigned as follows: Gorman Morton Steele Frank 13.0% 41.0 36.0 10.0 For the year of 2024, the partnership earned a profit of $54,800, and each partner withdrew the allowed amount of cash Required: Prepare schedules that determine the capital balances for the individual partners as of the end of each year 2022 through 2024. Complete this question by entering your answers in the tabs below. Ending Capital Ending Capital Ending Capital Balance 2022 Balance 2023 Balance 2024 Prepare a schedule that determines the ending capital balance for each partner as of the end of 2022. GORMAN and MORTON Statement of Partners' Capital For the Year Ending December 31, 2022 Beginning balances Net income allocation Drawings Ending balances Gorman Morton Total Ending Capital Balance 2072 Ending Capital Balance 2023 >

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 57P

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