Reference no: EM133069089
Question - Razul and Amy decided to start a partnership called SA Consulting on January 1, 2020. Each of them contributed a number of items to the partnership, which are listed below. All tangible assets are listed at their market value.
|
Razul
|
Amy
|
|
Cash
|
$42,100
|
Cash
|
$65,200
|
|
Equipment
|
157,900
|
Furniture
|
78,200
|
|
Bank Loan
|
88,000
|
Accounts Payable
|
26,800
|
On March 1, Razul and Amy added a new partner to the business, Sheila. Sheila will contribute $99,200 and receive a 31% share of the business. Use the capital balances from January 1 to determine any bonuses. Assume the existing partners will split any bonus evenly.
During the year, Razul and Amy withdrew $16,800 and $14,900 respectively and the business reported a net income of $377,400. Their partnership agreement provided for sharing of net income (loss) on the following basis:
1. Salary of $44,200 is allocated to Razul, $41,300 to Amy, and $34,500 to Sheila.
2. Interest is allocated at 6% of each partner's opening capital balance.
3. Remainder is shared where Razul gets 35%, Amy gets 33%, and Sheila gets 32%.
Required -
a) Prepare the journal entries to record the contributions of each partner to start the partnership.
b) Prepare a schedule showing the changes in capital and ending capital balances after the admission of Sheila.
c) Prepare the journal entry to record the admission of the new partner on March 1.
d) Prepare the journal entry to record the partner withdrawals of cash.
e) Prepare a schedule showing the allocation of the net income to the partners.
f) Prepare the journal entries to record the distribution of net income and the closing of the withdrawals accounts. Assume revenues and expenses have been closed to the income summary account.
g) After divding the income for the year, all parties agreed to liquidate the partnership. The values of the assets and liabilities are shown below. The furniture is sold for $69,840 and all other assets are sold at their given values. Any gains or losses from liquidation are split evenly among all partners.
Cash $447,750
Accounts Receivable 82,000
Net Equipment 205,270
Net Furniture 93,840
Accounts Payable 32,160
Bank Loan 123,200
Prepare the journal entries to sell the assets, distribute any gains or losses to the partners, pay the liabilities and distribute the cash to the partners.
|
Solving for the wacc average risk
: The WACC is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an appropriate discou
|
|
Calculate the transfer price
: The cost per yard of the cloth manufactured by Beige Division of the AquaShine Inc. is as follows: Direct material $18. Calculate the transfer price
|
|
Calculate the present values and effective rents
: You are appointed by the owner of an office building, Monument Tower, as the property manager. You are currently negotiating a 5-year lease with an IT company,
|
|
Estimating the quarterly payment
: Chuck borrowed $3,500 to consolidate his debts. Since Chuck had an excellent credit rating, he was able to borrow at a 12% effective annual rate.
|
|
Prepare the journal entries to sell the assets
: Prepare the journal entries to sell the assets, distribute any gains or losses to the partners, pay the liabilities and distribute the cash to the partners
|
|
What are the 4 spot rates or zero yields
: For this question, assume annual compounding. The following is a list of prices for zero-coupon bonds with different maturities and par value of $1,000.
|
|
Determining the year-end dividend payment
: You are considering the purchase of a stock that will make annual payments of $2.50 per year for the next four years. At the end of the fourth year, you believe
|
|
How many put option contracts are required
: Suppose you hold LLL employee stock options representing options to buy 10,000 shares of LLL stock. You wish to hedge your position by buying put options with t
|
|
Develop risk appetite or risk threshold
: Are you willing to take on more risk with the hopes of increasing the return on investment (ROI)? Please discuss.
|