Acct 2301 chapter 13 partnership
ACCT 2301 CHAPTER 13 PARTNERSHIP HANDOUT
1) Smith and Thomas agree to form a partnership called S & T partnership on 1|1|20x1. Smith”s investment in partnership-cash-$10000,inventory-$25000 account recevable-$17000 building-$60000 allowance for depreciation on building $20000 accounts payable $15000 note payable –$27000.Thomas”s investment in partnership-cash $13000 inventory $ 16000 equipments-$75000 allowance for depreciation on equipment-$25000 accounts payable $17000 note payable $12000.Explain the transaction and make journal entry in the books of S&T partnership.
2) On 1|1|20x1 the partners decide to divide the profits and losses as follows : salary to smith $24000 thomas $36000 and left over profit or loss divided equally between them. The total profits for 20x1 is $80000.Calculate profits to be given to each partner and do the journal entry.
3) On 1|1|20x2 the partners further agree to pay 10% interest on the capital on 1|1|20x2 besides salary agreed to in 20x1.Any profit or loss after giving salary and interest should be divided equally between partners. Net income for 20x2 is $90000.Calculate profits to be given to each partner and do the journal entry
4) On 1|1|20x3 they agree to continue sharing profits as in year 20x2.Income in 20x3 is $ 50000. Calculate profits to be given to each partner and do the journal entry.
5) A and B are partners in AB partnership. A”s capital is $30000 and B”s capital is $60000.They share profits in the ratio of their capital. They agree to admit C as a partner. What will be the analysis and journal entry in the following 5 different situations. a) A sells 10% of his interest for $5000 and B sells 5% of his interest for $6000 to C b) C invests in the partnership cash-$10000,Equipment $ 15000 and inventory $5000 c) C negotiates with A and B to revalue their partnership assets. Equipment at cost-$60000 accumulated depreciation $20000. C feels FMV of the equipment should be only $28000. d) C is admitted to the partnership by investing $30000 for 1|5th equity interest in the partnership e) C is admitted to the partnership by investing $30000 for 1|3rd interest in the partnership.
6) X & Y partnership is closed on 6|30|20x4 and the partnership should be liquidated. The partners share profits and losses in the ratio of 2:3. The balance sheet of the partnership and realization of cash by selling assets in 3 different situations is given below:
I II III
Cash $10000
Account receivable $25000 $25000 $25000 $10000
Inventory $30000 $35000 $28000 $5000
Equipment(net) $60000 $65000 $47000 $15000
Accounts payable $15000
Note payable $40000
X”s capital $ 28000
Y”S capital $42000
Do the calculations and necessary journal entries.
