Reference no: EM133119784
Question 1 - Sharon Kader and Emerson Wyndon are forming a partnership to develop a craft beer brewing company. Kader contributes cash of $400,000 and land appraised at $80,000 with a building which has a current market value of $210,000. When Kader purchased the land in 2014, its cost was $260,000. The partnership will assume Kader's morgtage on the property in the amount of $145,000. Wyndon contributes cash of $600,000 and equipment with a current market value of $80,000.
Required -
1. Journalize the partnership's receipt of assets and liabilities on October 15. Record this as a compound journal entry for both partners.
2. Compute the partnership's total assets, total liabilities, and total partners' equity immediately after organizing.
Question 2 - Martin and Baker decided to form a partnership. Martin contributed equipment (book value $77,000), inventory (paid $24,000), and $12,000 cash. The equipment and inventory have a current market value of $44,000 and $18,000, respectively. Martin also had a debt of $24,000 for the equipment. Baker contributed office equipment (book value $56,000) and cash of $64,000. The current market value of the office equipment is $28,000. The two partners fail to agree on a profit-and-loss-sharing ratio. For the first month (June), the partnership lost $4,200.
Required -
1. How much of this loss goes to Martin? How much goes to Baker?
2. The partners withdrew no assets during June. What is each partner's Capital balance at June 30? Prepare a T-account for each partner's Capital.
Question 3 - On January 1, 2020, Svitlana Yaeger and Val Havlac formed a partnership. The partners agreed to invest equal amounts of capital. Havlac invested her proprietorship's assets and liabilities (all accounts have normal balances) as follows
|
Haylac's Book Value
|
Current Market Value
|
Accounts receivable
|
$20,200
|
$20,000
|
Inventory
|
44,000
|
48,000
|
Prepaid expenses
|
4,800
|
4,000
|
Office equipment
|
92,000
|
56,000
|
Accounts payable
|
48,000
|
48,000
|
On January 1, 2020, Yaeger invested cash in an amount equal to the current market value of Havlac's partnership capital. The partners decided that Havlac would earn two- thirds of partnership profits because she would manage the business. Yaeger agreed to accept one-third of profits. During the remainder of the year, the partnership earned $276,000. Havlac's withdrawals were $76,000, and Yaeger's withdrawals were $56,000.
Required -
1. Journalize the partners' initial investments.
2. Prepare the partnership balance sheet immediately after its formation on January 1, 2020.
3. Calculate the partners' Capital balances at December 31, 2020.