Chapter 13_Partnership_Problem 1 & 2

Advanced
Accounting Assigned Problem 1 – Chapter 13

a)
Fox, George, and Hayes form a partnership on 1-1-20X1. Fox contributes cash of $40,000 and equipment
with a book value to Fox of $8,000 and a fair market value of $10,000. George contributes cash of $25,000 and
equipment with a book value to George of $30,000 and a fair market value of
$25,000. Hayes contributes $5,000 of
cash and equipment with a book value to Hayes of $15,000 and a fair market
value of $20,000.

Prepare the entry for the admission of the
partners to the new partnership.

b)
Fox, George, and Hayes partnership agree states the following regarding
the allocation of net income:

·
Interest on beginning of the
year capital balances is 5 percent.

·
A bonus is to be allocated to
George computed as 10 percent of income after the bonus and in excess of
$50,000 (George’s name is important to the partnership – thus the bonus)

·
A salary of $40,000 is to be
allocated to Fox (Fox is the only partner working in the partnership).

·
Any remaining income is to be
allocated 20 percent to Fox, 60 percent to George, and 20 percent to Hayes.

Compute how much of the $90,000 of
partnership income for year 20X1 is to be allocated to each partner.

Advanced
Accounting Assigned Problem 2 – Chapter 13

The Roe, Soh, and Tow Partnership earned $150,000
of net income for the year. The
partnership agreement states the following regarding the allocation of net
income:

·
Salary to Roe of $40,000;
Salary to Soh of $60,000, Salary to Tow of $50,000

·
Interest on average capitals –
the interest amounts are computed as $3,000 to Roe, $4,200 to Soh, and $4,800
to Tow.

·
Any remaining income is to be
allocated 25 percent to Roe, 40 percent to Soh, and 35% to Tow.

Show the entry made to close income summary
to partner capital.