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2-Assume a Legal Entity’s capital structure consists of the following accounts
|
General partner capital |
$240,000 |
|
Limited partner capital |
2,160,000 |
|
Total capital |
$2,400,000 |
A Reporting Company is the sole general partner of the Legal Entity. The limited
What is the maximum amount of expected losses that the Legal Entity can expect to sustain without being considered a variable interest entity (VIE)?
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- A, B and C are in partnership sharing profits and losses at the ratio of 5: 3:2. The balance sheet of the firm on 31.12.2021 was as follows: Liabilities Capital A/cs A B C Bank Loan Trade payables Balance Sheet Assets Sundry Fixed Assets Inventories 50,000 40,000 Trade receivables 30,000 Joint Life Policy 40,000 Bank 30,000 1,90,000 80,000 50,000 30,000 20,000 10,000 1,90,000 On 1.1.2022, A wants to retire, B and C agreed to continue at 2:1. Joint Life Policy was taken on 1.1.2016 for 1,00,000 and its surrender value as on 31.12.2021 was 25,000. For the purpose of A's retirement goodwill was raised for ₹1,00,000. Sundry Fixed Assets was revalued for 1,10,000. But B and C did not prefer to show such increase in assets in the Balance Sheet. Also they agreed to bring necessary cash to discharge 50% of the A's claim, to make the bank balance 25,000 and to make their capital proportionate. Prepare necessary journal entries.Admission by Investment of Assets Partners Quinsay and Buenaventura have capital balances of P100,000 and P40,000 and share income in a ratio of 4:1, respectively. Rementina is to be admitted into the partnership with a 20% interest in the business. What is the journal entries and computations to record the admission of Rementina for each of the following independent situations: 1. Rementina invested P60,000. Total capital will be P200,000. 2. Rementina purchased the 20% interest by paying Quinsay P22,000 and Buenaventura P11,000. 3. Rementina invested P32,000. Total capital will be P172,000.tnership s. Is th Chapter 2-Nature and Formation of a Partnership EXERCISES Exercise 2-1 (Cash and Non-cash Contributions) Give the entry to record the investment of Alonzo into the partnership under each of the following independent assumptions: a. ers int b. conter c. How d. does Cash of P400,000. 63 Accounts receivable of P500,000 with an allowance for uncollectible accounts of P50,000. Inventories that cost P300,000 using the moving average method accepted by the partnership at its FIFO value of 80% of average cost. Equipment that cost P900,000 with a book value of P300,000 after four years of use without salvage value. The equipment should have been depreciated over a 10-year useful life. Exercise 2-2 (Cash and Net Asset Contributions)
- 1. The following items are being invested by two sole proprietors, Diona and Diluc, to form DD Partnership: Agreed Values Investment by Investment by Diona Diluc Cash P 120,000 P 120,000 Inventory 120,000 Land 240,000 Building 480,000 Equipment 240,000 Mortgage on building assumed by the 240,000 partnership Required: Prepare journal entries to record the formation of partnership assuming that their capital credits will be the net assets to be invested in the partnership.Title A partnership firm has three partners : X, Y and Z with capitals as X : Rs. 20,000; Y : Rs. 10,000.. Description A partnership firm has three partners : X, Y and Z with capitals as X : Rs. 20,000; Y : Rs. 10,000 and Z Rs. 10,000. The creditors amounted to Rs. 20,000 and sundry assets to Rs. 60,000. In dissolution, the assets were realised as follows: 1st instalment Rs.20,000; 2nd instalment Rs. 20,000 and final realisation Rs. 10,000. The partners share profits and losses in the ratio of 3 : 2 : 1. Show the piece-meal distribution of the realisations on ---- (i) Surplus Capital Method; (ii) Maximum Loss Method. 31.52 Accounting for Dissolution of the Firm4. Roberts and Smith drafted a partnership agreement that lists the following assets contributed at the partnership's formation: Contributed by Roberts Smith $20,000 $30,000 15,000 40,000 Cash Inventory Building Furniture & Equipment 15,000 The building is subject to a mortgage of $10,000, which the partnership has assumed. The partnership agreement also specifies that profits and losses are to be distributed evenly. What amounts should be recorded as capital for Roberts and Smith at the formation of the partnership? Roberts Smith $35,000 $85,000 $35,000 $75,000 $55,000 $55,000 $60,000 $60,000 а. b. с. d.
- Partner capital accounts upon formation of partnership-Bonus Method Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports net assets of $35,000. Partner B is contributing cash of $45,000. The partners agree that the initial capital of the partnership should be shared equally. what will be the initial balance of the Capital Accounts of the partners assuming that the partners wish to employ the Bonus Method? Select one: a. Partner A Partner B $35,000 $45,000 b. Partner A Partner B $80,000 $80,000 c. Partner A Partner B $40,000 $40,000 d. Partner A Partner B $45,000 $45,000The following is the current balance sheet for a local partnership of doctors: Cash and current assets Land Building and equipment (net) Totals $ 71,000 210,000 169,000 $ 450,000 Liabilities A, capital B, capital C, capital D, capital. Totals The following questions represent independent situations: $ 68,000 48,000 68,000 118,000 148,000 $ 450,000 a. E is going to invest enough money in this partnership to receive a 20 percent interest. No goodwill or bonus is to be recorded. How much should E invest? b. E contributes $45,000 in cash to the business to receive a 10 percent interest in the partnership. Goodwill is to be recorded. Profits and losses have previously been split according to the following percentages: A, 30 percent, B. 10 percent; C, 40 percent; and D, 20 percent. After E makes this investment, what are the individual capital balances? c. E contributes $66,000 in cash to the business to receive a 20 percent interest in the partnership. Goodwill is to be recorded. The four…GWS and BCP organized the GB Partnership on January 1, 2018. The following entries were made in their capital accounts during 2018. Debit Credit GWS, Capital: January 1 April 1 October 1 P315,000 P105,000 175,000 Debit Credit ВСР, Саpital: January 1 March P413,000 1 September 1 November 1 52,500 105,000 94,500 Required: А. If the partnership profit for the year 2018 computed before salaries or interest is P217,000, determine its distribution between the partners under each of the following independent profit-sharing agreements: (1) Interest at 6% is allowed on average capital investments and the remainder of the profit is divided equally. (2) A salary of P126,000 is to be credited to BCP, 6% interest is allowed on each partner on his ending capital balance and the remainder of the profit in the ratio of 3:2. Salaries are allowed GWS and BCP in amounts of P119,000 and P133,000, respectively, and the remaining profit or resulting loss is divided in the ratio of average capital balance.…
- 1. Mr.W, Mr.X, Mrs.Y and Ms.Z organized a general partnership with W and X as industrial partners and Y and Z as capitalist partners. Y contributed P500,000.00 and Z contributed P200,000.00 to the common fund. By a unanimous vote of the partners, W and X were appointed managing partners, without any specification of their respective powers and duties. A applied for the position of Secretary and B applied for the position of Accountant of the partnership. The hiring of A was decided upon by W and X, but was opposed by Y and Z. The hiring of B was decided upon by W and Z, but was opposed by X and Y. Who of the applicants should be hired by the partnership? 2. Joey and Ruddie formed a partnership to operate a car repair shop in Dagupan City. Joey provided the capital while Ruddie contributed his labor and industry. On one side of their shop, Joey opened and operated a coffee shop, while on the other side, Ruddie put up a car accessories store. May they engage in such…Exercise 2: Admission by Contributing Capital to Partnership Directly Dennis is being admitted into the partnership of Danilo, Romeo and Sanros. As of the date of admission, the capital balances and share in net income of the three partners are as follows: Capital Balance P30,000 P/L Ratio Danilo 30% Romeo 60,000 50 Sanros 10,000 20 Make the entries incidental to the admission of Dennis who invests P30,000 for: a. 1/5 interest in the partnership with capital credit equal to his investment. b. 1/3 interest in the partnership with total capitalization of P150,000. c. 1/5 interest in the partnership with total capitalization of P130,000. d. 30% interest in the partnership with total capitalization of P130,000. e. 25% interest in the partnership with total agreed capital of P150,000. f. 30% interest in the partnership. The partnership has asset revaluation of P10,000 g. 15% interest in the total partners' equity of P150,000.Formation of partnership Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: Cash $5,000 Accounts payable $15,000 Receivables 10,000 Accrued liabilities Inventories 20,000 Total liabilities 10,000 $25,000 Total assets $35,000 Net assets $10,000 Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method.
