Compute the cash payments to the partners

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Reference no: EM131150644

Several years ago Polar Inc. acquired an 80% interest in Icecap Co. The book values of Icecap's asset and liability accounts at that time were considered to be equal to their fair values. Polar's acquisition value corresponded to the underlying book value of Icecap so that no allocations or goodwill resulted from the transaction.

The following selected account balances were from the individual financial records of these two companies as of December 31, 2013:

1. Assume that Polar sold inventory to Icecap at a markup equal to 25% of cost. Intra-entity transfers were $130,000 in 2012 and $165,000 in 2013. Of this inventory, $39,000 of the 2012 transfers were retained and then sold by Icecap in 2013, while $55,000 of the 2013 transfers were held until 2014.

Required:

For the consolidated financial statements for 2013, determine the balances that would appear for the following accounts: (1) Cost of Goods Sold, (2) Inventory, and (3) Non-controlling Interest in Subsidiary's Net Income.

2. Assume that Icecap sold inventory to Polar at a markup equal to 25% of cost. Intra-entity transfers were $70,000 in 2012 and $112,000 in 2013. Of this inventory, $29,000 of the 2012 transfers were retained and then sold by Polar in 2013, whereas $49,000 of the 2013 transfers were held until 2014.

Required:

The partners of Donald, Chief & Berry LLP decided to liquidate on August 1, 2013. The balance sheet of the partnership is as follows, with the profit and loss ratio of 25%, 45%, and 30%, respectively.

DONALD, CHIEF, & BERRY LLP
Balance Sheet
August 1, 2013
AssetsLiabilities & Partners' Capital
Cash$ 60,000Trade accounts payable$130,000
Loan receivable from Donald40,000Loan payable to Chief60,000
Other assets500,000Donald, capital140,000
Chief, capital160,000
Berry, capital 110,000
Total$600,000Total$600,000

The disposal of Other Assets with a carrying amount of $200,000 realized $140,000, and all available cash was distributed.

3. Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2013, to record the realization of Other Assets.

4. Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2013, to record payment of liabilities.

5. Prepare the journal entry for Donald, Chief & Berry LLP on August 1, 2013, to record the offset of the loan receivable from Donald.

6. Prepare the schedule to compute the cash payments to the partners.

Boerkian Co. started 2013 with two assets: Cash of §26,000 (Stickles) and Land that originally cost §72,000 when acquired on April 4, 2010. On May 1, 2013, the company rendered services to a customer for §36,000, an amount immediately paid in cash. On October 1, 2013, the company incurred an operating expense of §22,000 that was immediately paid. No other transactions occurred during the year so an average exchange rate is not necessary. Currency exchange rates were as follows:

7. Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the stickle (§) was the functional currency of the subsidiary. Calculate the translation adjustment for this subsidiary for 2013 and state whether this is a positive or a negative adjustment.

8. Assume Boerkian was a foreign subsidiary of a U.S. multinational company and the U.S. dollar was the functional currency of the subsidiary. Prepare a schedule of changes in the net monetary assets of Boerkian for the year 2013 and properly label the resulting gain or loss.

9. Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the local currency of the subsidiary (stickle) is the functional currency. On the December 31, 2013 balance sheet, what was the translated value of the Land account?

10. Assume that Boerkian was a foreign subsidiary of a U.S. multinational company and the U.S. dollar is the functional currency. On the December 31, 2013 balance sheet, what was the remeasured value of the Land account?

Reference no: EM131150644

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