Partnership liabilities consist of accounts payable

Assignment Help Accounting Basics

Reference no: EM13900475

Portfolio Project: Trust and Estates - Part 2

PART II - Tax Return #2, Partnership Return (Form 1065, only Page 1 and Schedule K required)

Background

The Rowdy Fun is a limited partnership and was formed on June 1, 2005, by Thomas Kyle, its general partner, and two other limited partners when they each contributed an equal amount of cash to start the new enterprise. Rowdy Fun is an outdoor equipment retailer focused on selling outdoor activities gear. Thomas has a 33.33% profits and capital interest and the limited partners hold the remaining 66.66% of the profits and capital interests. Their profits and capital interests have remained unchanged since the partnership was formed. Thomas is actively involved in managing the business while the limited partners are simply investors.

• Rowdy Fun is located at 8955 Golden Drive, Sunnydale, AZ 34592.

• The employer identification number for Rowdy Fun is 47-8593563.

• Rowdy Fun uses the accrual method of accounting and has a calendar year end.

• Thomas' address is 853 Crystal Drive, Sunnydale, AZ 34592.

Additional Information

• Rowdy Fun has total assets of $1,900,000 and total liabilities of $550,000 at the beginning of the year and total
assets of $2,300,00 and total liabilities of $725,000 at the end of the year.

• Partnership liabilities consist of accounts payable, and Thomas, as general partner, is legally responsible for
paying these liabilities if the partnership does not.

• Five years ago, Rowdy Fun purchased an original outdoor statue with the intent for display in the store. In
2013, the statue was sold. The $15,000 recognized gain from the sale is reflected in the income statement.

• For tax purposes, Rowdy Fun has consistently elected under Section 179 to expense any furniture or fixtures
purchased every year since it was formed. There is no tax basis in any of its depreciable assets. This year,
Rowdy Fun expensed $23,000 of signs and display cases for tax purposes.

• On November 20th, Rowdy Fun distributed $90,000 ($30,000 per partner) to the partners.

• Miscellaneous expenses include a $1200 fine for violating a local ordinance.

• Rowdy Fun maintains its books using generally accepted accounting principles.

Financial Statements

Rowdy Fun
Income Statement
For year ended December 31, 2013

Sales		975,000
Sales returns and allowances		(25,000)
Cost of goods sold		(300,000)
Gross profit from operations		650,000

Other Income:
Interest from Money Market		3,500
Gain for sale of statue		15,000
Gross income		668,500

Expenses:
Employee wages		(125,000)
Interest on accounts payable		(2,000)
Payroll and property taxes		(45,000)
Supplies		(26,000)
Rent on retail building		(20,000)
Depreciation on furniture and fixtures		(15,400)
Advertising		(4,000)
Guaranteed payments to Thomas Kyle		(40,000)
Utilities		(16,000)
Accounting and legal services		(5,000)
Meals and entertainment		(500)
Charitable Contributions		(375)
Miscellaneous expense		(425)
Total expenses		(299,700)

Net Income for Books		368,800

Reference no: EM13900475

Questions Cloud

Determine the estimated earnings per share impact : Determine the estimated earnings per share impact from the two financing alternatives. Which alternative has the most favorable impact on earnings per share?

Provides take-out laundry services : Johnson Inc. provides take-out laundry services to hospitals and health care providers in the Northwest. It is a C-Corporation with three shareholders, all of whom work full time for the business. The three owners have been buddies and partners since..

Determine estimated earnings per share for triangle media : Determine the estimated earnings per share for 2007, including the impact of the new investment. Assume the return on the investment was only 4%. What would be the impact on earnings per share under this assumption?

In distributive strategy-the union makes opening proposal : Management in a small company has recently realized a $100,000 increase in profits. This has occurred after two years of poor economic performance due to expensive storm damage in two of its facilities. In a distributive strategy, if the company open..

Partnership liabilities consist of accounts payable : Partnership liabilities consist of accounts payable

How individual choices interacted with individual choices : For each of these actions, describe how your individual choices interacted with the individual choices made by others. Were other people left better off or worse off by your choices in each case?

What will be the number of share outstanding after the split : What will be the number of shares outstanding after the split? If the common stock had a market price of $165 per share before the stock split, what would be an approximate market price per share after the split?

Use the business rules to create an ERD : Use the following business rules to create an ERD which include all appropriate connectivities and cardinalities.

For what reasons might aspen have purchased treasury stock : Where will the balance in Paid-In Capital from Sale of Treasury Stock be reported on the balance sheet? For what reasons might Aspen Inc. have purchased the treasury stock?

User Account

All Pages