Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 8E
To determine
Prepare a statement of partners’ equity for the year ended December 31.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Mike and Rachel form M&R Partnership. Mike invests $40,000 cash and Rachel invests $60,000 cash. The partners agree to share income as follows: Mike gets a salary allowance of $5,000 per year and Rachel gets a salary allowance of $9,000 per year; both get an annual interest allowance of 10% on their initial investment; and any remaining balance is shared equally. Net income for the year is $30,000. Also, Mike withdrew $1,000 cash from the partnership and Rachel withdrew $2,000. Prepare a statement of partners’ equity for the year ended December 31.
Mike and Rachel form M&R Partnership. Mike Invests $40,000 cash and Rachel invests $60,000 cash. The partners agree
to share income as follows: Mike gets a salary allowance of $5,000 per year and Rachel gets a salary allowance of
$9,000 per year, both get an annual interest allowance of 10% on their initial investment, and any remaining balance is
shared equally. Net income for the year is $30,000. Also, Mike withdrew $1,000 cash from the partnership and Rachel
withdrew $2,000.
Prepare a statement of partners' equity for the year ended December 31.
Note: Do not round intermediate calculations. Enter all allowances as positive values. Enter losses and withdrawals as
negative values.
M&R PARTNERSHIP
Statement of Partners' Equity
For Year Ended December 31
Mike
Initial partnership investments
Net income
Total net income
Total
Rachel
Total
Merkel and Putin began a partnership by investing $6,000 and $4,000, respectively. During its first year, the partnership earned $80,000. Show how the $80,000 income is allocated under each separate plan: (1) the partners share income and loss equally; (2) the partners share income and loss in proportion to their initial investments; and (3) the partners share income by giving a $35,000-per-year salary allowance to Merkel, a $13,000-per-year salary allowance to Putin, 20% interest on their initial capital investments, and any remaining balance shared 70% to Merkel and 30% to Putin.
Chapter 12 Solutions
Principles of Financial Accounting.
Ch. 12 - Prob. 1MCQCh. 12 - Prob. 2MCQCh. 12 - Prob. 3MCQCh. 12 - Prob. 4MCQCh. 12 - Prob. 5MCQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQ
Ch. 12 - Prob. 6DQCh. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - Prob. 10DQCh. 12 - Prob. 11DQCh. 12 - Prob. 12DQCh. 12 - Prob. 1QSCh. 12 - Prob. 2QSCh. 12 - Prob. 3QSCh. 12 - Prob. 4QSCh. 12 - Prob. 5QSCh. 12 - Prob. 6QSCh. 12 - Prob. 7QSCh. 12 - Prob. 8QSCh. 12 - The Field, Brown Snow partnership was begun with...Ch. 12 - Prob. 10QSCh. 12 - Determine whether each characteristic describes a...Ch. 12 - For each separate case, indicate which type of...Ch. 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. 1APCh. 12 - Prob. 2APCh. 12 - Prob. 3APCh. 12 - Prob. 4APCh. 12 - Prob. 5APCh. 12 - Prob. 6APCh. 12 - Prob. 1BPCh. 12 - Prob. 2BPCh. 12 - Prob. 3BPCh. 12 - Prob. 4BPCh. 12 - Prob. 5BPCh. 12 - Prob. 6BPCh. 12 - Prob. 12SPCh. 12 - Prob. 1AACh. 12 - Prob. 2AACh. 12 - Review Samsungs 1938 to 1970 history at...Ch. 12 - Prob. 1BTNCh. 12 - Prob. 2BTNCh. 12 - Prob. 3BTNCh. 12 - Prob. 5BTN
Knowledge Booster
Similar questions
- The partnership of Michelle, Amal, and Maureen has done well. The three partners have shared profits and losses in a 1:3 ratio, with capital balances of $60,000 each. Maureen wants to retire and withdraw. Prepare a schedule showing how the cost should be divided if Amal and Michelle decide to pay Maureen $70,000 for retirement of her capital account and the new agreement will share profits and losses 50:50.arrow_forwardGraeme, Bella and Anne are partners with capital balances of $90,000, $70,000, and $50,000, respectively. The partners agreed to share profits and losses as follows: Salary allowances of $7,000 to Graeme, $8,000 to Bella and $14,000 to Anne. Interest allowances of 10% on beginning-of-year capital balances Balance to be divided equally. If profit for the year is $220,000, calculate each partner's share and prepare the appropriate journal entry to close the Income Summary to the capital accounts.arrow_forwardSaly and Jena formed a partnership with capital contributions of $300,000 and $400,000, respectively. Their partnership agreement calls for Saly to receive a $60,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally. Net income for the current year is $150,000.Required: Calculate Saly’s share of Net income for the current year.arrow_forward
- On March 1, Eckert and Kelley formed a partnership. Eckert contributed $82,500 cash, and Kelley contributed land valued at $60,000 and a building valued at $100,000. The partnership also took Kelley’s $92,500 longterm note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $25,000, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $34,000 cash and Kelley withdrew $20,000 cash. After adjusting and closing entries are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $90,000. 1. Prepare journal entries to record (a) the partners’ initial capital investments, (b) their cash withdrawals, and (c) the December 31 closing of both the withdrawals and Income Summary accounts. 2. Determine the balances of the partners’ capital accounts as of…arrow_forwardOn March 1, Eckert and Kelley formed a partnership. Eckert contributed $75,000 cash, and Kelley contributed land valued at $60,000 and a building valued at $90,000. The partnership also took Kelley's $65,000 long-term note payable associated with the land and building. The partners agreed to share income as follows: Eckert gets an annual salary allowance of $30,500, both get an annual interest allowance of 10% of their initial capital investment, and any remaining income or loss is shared equally. On October 20, Eckert withdrew $28,000 cash and Kelley withdrew $21.000 cash. First year income was $82,000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of income, and then prepare journal entries to close Income Summary and the partners' withdrawals accounts. 2. Determine the balances of the partners' capital accounts as of December 31. Complete this question by…arrow_forwardJamison and Blue form a partnership with capital contributions of $600,000 and $800,000, respectively. Their partnership agreement calls for Jamison to receive $120,000 per year in salary. Also, each partner is to receive an interestallowance equal to 10% of the partner’s beginning capital contributions, with any remaining income or loss divided equally. If net income for its initial year is $270,000, then Jamison’s and Blue’s respective shares are:arrow_forward
- Nancy and Betty enter into a partnership agreement whereby they undertake to share profits according to the following rules: (a) Nancy and Betty will receive a salary of $1,400 and $11,500 respectively. (b) The next allocation is based on 10% of the partner's capital balances. (c) Any remaining profit or loss is to be borne completely by Betty. The partnership's profit for the first year is $40,000. Nancy's capital balance is $88,000 and Betty's capital balance is $12,000 as at the end of the year. Calculate the share of profit/loss to be borne by Betty. Select one: a. $29,800 O b. $9,000 O c. $1,000 O d. $10,200arrow_forwardHay, Straw and Clover formed the HSC Partnership, agreeing to share profits and losses equally. Clover will manage the business for which he will receive a guaranteed payment of $30,000 per year. Cash receipts and disbursements for the year were as follows: Net income from operations (before guaranteed payment) $ 90,000 Guaranteed payment to Clover 30,000 What amount of income will each partner report on their personal return?arrow_forwardNancy and Betty enter into a partnership agreement whereby they undertake to share profits according to the following rules: (a) Nancy and Betty will receive salaries of $13,500 and $24,500 respectively as the first allocation. (b) The next allocation is based on 20% of each partner's capital balances. (c) Any remaining profit or loss is to be allocated completely to Betty. The partnership's net loss for the first year is $50,000. Nancy's capital balance is $83,000 and Betty's capital balance is $13,000 at the end of the year. Calculate the share of profit (loss) to be allocated to Nancy OA. $(16,600) OB. $13,500 OC. $30,100 O D. $(80,100) SIZarrow_forward
- On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92.000 cash, and Kelley contributed land valued at $73,600 and a bulding valued at $103.600. The partnership also took Kelley's $82000 long-term note payable associated with the land and bullding. The partners agreed to share Income as follows: Eckert gets an annual salary allowance of $30,000, both get an annual Interest allowance of 9% of their Initial capital Investment, and any remalning Income or loss Is shared equally. On October 20, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. After adjusting and closing entrles are made to the revenue and expense accounts at December 31, the Income Summary account had a credit balance of $76.000. Required: 1a. & 1b. Prepare journal entries to record the partners' initial capital Investments and their subsequent cash withdrawals. 1c. Determine the partners' shares of Income, and then prepare journal entries to close Income Summary and the partners'…arrow_forwardthree partners, John, Jim, and Alice form a partnership. John invests $27,500; Jim invests $10,700, and Alice invests $8,400. In addition, Jim performs specific management functions for which he is paid $2,000 from the partnership proceeds. if the partnership earns $176,000, how much will jim receive?arrow_forwardKala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000, respectively. Adam joins the partnership by buying one-half of Kala's interest for $30,000. In addition, because of Adam's outstanding sales skills, the partners agree to increase his interest to 40% if he invests another $10,000. The income- sharing ratio of Kala, Leah, and Adam is 4:3:1. a. Journalize the entries for the admission of Adam to the partnership. If an amount box does not require an entry, leave it blank. (1) (2) b. Immediately after Adam's admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000. Journalize the entry for this transaction. If an amount box does not require an entry, leave it blank. 8arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College