Principles of Financial Accounting.
Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Chapter 12, Problem 1BTN

1.

To determine

Compute the allocation of the income for the current month by using original agreement.

2.

To determine

Compute the income allocation for the current month using Partner C’s proposed agreement.

3.

To determine

Identify the ethical components of this partnership decision for doctors.

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Taye Barrow, M.D., and James Robbins, M.D., are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a partnership. The partnership agreement calls for dividing income equally between the two doctors. After several months, the followingconversation takes place between the two doctors:Barrow: I’ve noticed that your patient load has dropped over the last couple of months. When we formed our partnership, we were seeing about the same number of patients per week. However, now our patient records show that you have been seeing about half as many patients as I have. Are there any issues that I should be aware of?Robbins: There’s nothing going on. When I was working on my own, I was really putting in the hours. One of the reasons I formed this partnership was to enjoy life a little more and scale back a little bit.Barrow: I see. Well, I find that I’m working as hard as I did when I…
Salem and Durham entered into a partnership to provide supply chain management and logistic services in the Silicon Valley region of California.   In their agreed Articles of Partnership, the partners acknowledged the following: Sharing of profits and losses: Compensate each partner $125 per hour for their billable hourly consulting work performed. Salem receives an additional $3,000 monthly as the partnership’s Chief Operating Officer (COO); Durham receives an additional $2,500 monthly as the partnership’s Chief Technology Officer (CTO), Any remaining profits or losses are divided equally between the partners.   Each partner is permitted but not required to withdraw no more than $800 per month from the partnership and such withdrawals will be accounted for as direct reductions of the withdrawing partner’s capital balance.   They will begin their partnership with equal beginning capital balances.   On January 1, 20x1, when they formed the partnership, each partners’…
Salem and Durham entered into a partnership to provide supply chain management and logistic services in the Silicon Valley region of California.   In their agreed Articles of Partnership, the partners acknowledged the following: Sharing of profits and losses: Compensate each partner $125 per hour for their billable hourly consulting work performed. Salem receives an additional $3,000 monthly as the partnership’s Chief Operating Officer (COO); Durham receives an additional $2,500 monthly as the partnership’s Chief Technology Officer (CTO), Any remaining profits or losses are divided equally between the partners.   Each partner is permitted but not required to withdraw no more than $800 per month from the partnership and such withdrawals will be accounted for as direct reductions of the withdrawing partner’s capital balance.   They will begin their partnership with equal beginning capital balances.   On January 1, 20x1, when they formed the partnership, each partners’…
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