a. Determine D'Lake, Green, Divot, recognized gain or loss upon formation of Slicenhook.b. What is D'Lake, Green, Divot, initial tax basis in Slicenhook on January 2, 2022?c. Prepare Slicenhook's opening tax basis balance sheet as of January 2, 2022. Cash__Land__Total__ Liabilities__Tax Capital:D'Lake__Green__Divot__Total__ Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf clubmanufacturing business together. On January 2, 2022, D'Lake, Green, and Divot form the SlicenhookPartnership, a general partnership. Slicenhook's main product will be a perimeter-weighted titanium driverwith a patented graphite shaft. All three partners plan to actively participate in the business. The partnerscontribute the following property to form Slicenhook:PartnerCarrieD'LakeContributionLand, FMVBasis $469,000,MortgageCashCash$469,000$ 69,000$400,000$400,000Carrie had recently acquired the land with the idea that she would contribute it to the newly formedpartnership. The partners agree to share in profits and losses equally. Slicenhook elects a calendar year-endand the accrual method of accounting.Reed A.GreenDoug A.DivotIn addition, Slicenhook received a $1,608,000 recourse loan from Big Bank at the time the contributionswere made. Slicenhook uses the proceeds from the loan and the cash contributions to build a state-of-the-art manufacturing facility ($1,245,000), purchase equipment ($627,000), and produce inventory ($418,000).With the remaining cash, Slicenhook invests $54,000 in the stock of a privately owned graphite researchcompany and retains ($64,000) as working cash.Slicenhook operates on a just-in-time inventory system so it sells all inventory and collects all salesimmediately. That means that at the end of the year, Slicenhook does not carry any inventory or accountsreceivable balances. During 2022, Slicenhook has the following operating results:SalesCost of goods soldInterest income from tax-exempt bondsQualified dividend incomefrom stockOperating expensesDepreciation (tax)§179 on equipmentEquipmentBuildingInterest expense on debt$ 39,00090,00033,000$SalesCost of goods soldInterest income from tax-exemptbondsQualified dividend income fromstockOperating expensesDepreciation (tax)1,162,000418,3209901,770135,000162,000210,000The partnership is very successful in its first year. The success allows Slicenhook to use excess cash fromoperations to purchase $42,000 of tax-exempt bonds (you can see the interest income already reflected inthe operating results). The partnership also makes a principal payment on its loan from Big Bank in theamount of $300,000 and a distribution of $100,000 to each of the partners on December 31, 2022.The partnership continues its success in 2023 with the following operating results:$1,623,000568, 7509901,770150,000 Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf clubmanufacturing business together. On January 2, 2022, D'Lake, Green, and Divot form the SlicenhookPartnership, a general partnership. Slicenhook's main product will be a perimeter-weighted titanium driverwith a patented graphite shaft. All three partners plan to actively participate in the business. The partnerscontribute the following property to form Slicenhook:PartnerCarrieD'LakeContributionLand, FMVBasis $469,000,MortgageCashCash$469,000$ 69,000$400,000$400,000Carrie had recently acquired the land with the idea that she would contribute it to the newly formedpartnership. The partners agree to share in profits and losses equally. Slicenhook elects a calendar year-endand the accrual method of accounting.Reed A.GreenDoug A.DivotIn addition, Slicenhook received a $1,608,000 recourse loan from Big Bank at the time the contributionswere made. Slicenhook uses the proceeds from the loan and the cash contributions to build a state-of-the-art manufacturing facility ($1,245,000), purchase equipment ($627,000), and produce inventory ($418,000).With the remaining cash, Slicenhook invests $54,000 in the stock of a privately owned graphite researchcompany and retains ($64,000) as working cash.Slicenhook operates on a just-in-time inventory system so it sells all inventory and collects all salesimmediately. That means that at the end of the year, Slicenhook does not carry any inventory or accountsreceivable balances. During 2022, Slicenhook has the following operating results:SalesCost of goods soldInterest income from tax-exempt bondsQualified dividend incomefrom stockOperating expensesDepreciation (tax)§179 on equipmentEquipmentBuildingInterest expense on debt$ 39,00090,00033,000$SalesCost of goods soldInterest income from tax-exemptbondsQualified dividend income fromstockOperating expensesDepreciation (tax)1,162,000418,3209901,770135,000162,000210,000The partnership is very successful in its first year. The success allows Slicenhook to use excess cash fromoperations to purchase $42,000 of tax-exempt bonds (you can see the interest income already reflected inthe operating results). The partnership also makes a principal payment on its loan from Big Bank in theamount of $300,000 and a distribution of $100,000 to each of the partners on December 31, 2022.The partnership continues its success in 2023 with the following operating results:$1,623,000568, 7509901,770150,000

It is an agreement between two or more parties to conduct the business and share the profits and…

Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf club manufacturing business together. On January 2, 2022, D'Lake, Green, and Divot form the Slicenhook Partnership, a general partnership. Slicenhook's main product will be a perimeter-weighted titanium driver with a patented graphite shaft. All three partners plan to actively participate in the business. The partners contribute the following property to form Slicenhook:

Carrie D'Lake, Reed A. Green, and Doug A. Divot share a passion for golf and decide to go into the golf club manufacturing business together. On January 2, 2022, D'Lake, Green, and Divot form the Slicenhook Partnership, a general partnership. Slicenhook's main product will be a perimeter-weighted titanium driver with a patented graphite shaft. All three partners plan to actively participate in the business. The partners contribute the following property to form Slicenhook:

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

22nd Edition

ISBN:9781305666160

Author:James A. Heintz, Robert W. Parry

Publisher:James A. Heintz, Robert W. Parry

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 1MP

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Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O'Donnell, a local merchant, to contribute the capital to form a partnership. On January 1, 2016, O'Donnell invests a building worth $130,000 and equipment valued at $140,000 as well as $60,000 in cash. Although Reese makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances. To entice O'Donnell to join this partnership, Reese draws up the following profit and loss agreement: O'Donnell will be credited annually with interest equal to 10 percent of the beginning capital balance for the year. O'Donnell will also have added to his capital account 10 percent of partnership income each year (without regard for the preceding interest figure) or $4,000, whichever is larger. All remaining income is credited to Reese. Neither partner is allowed to withdraw funds from the partnership during 2016.…
Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O'Donnell, a local merchant, to contribute the capital to form a partnership. On January 1, 2016, O'Donnell invests a building worth $130,000 and equipment valued at $140,000 as well as $60,000 in cash. Although Reese makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances. To entice O'Donnell to join this partnership, Reese draws up the following profit and loss agreement: • O'Donnell will be credited annually with interest equal to 10 percent of the beginning capital balance for the year. • O'Donnell will also have added to his capital account 10 percent of partnership income each year (without regard for the preceding interest figure) or $4,000, whichever is larger. All remaining income is credited to Reese. Neither partner is allowed to withdraw funds from the partnership during…
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