Reference no: EM132780082
Questions -
Q1. Rick, Mary, and Joe formed a partnership on January 1, 2017, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Mary, and (3) sharing the remainder of the income or loss in a ratio of 20% for Rick, and 40% each for Mary and Joe. Net income was $150,000 in 2017 and $180,000 in 2018. Each partner withdrew $12,000 for 2017 and another $12,000 2018. Prepare the Statement of Partners' Capital Balances for 2017 & 2018.
Q2. The capital balances of the DEF Partnership are as follows:
|
Danielson
|
Eklund
|
Forsberg
|
Total
|
|
$180,000
|
95,000
|
150,000
|
$425,000
|
Income sharing ratio is: Danielson, 25%; Eklund, 45%; Forsberg, 30%. Assume the partnership'sidentifiable net assets are carried at amounts approximating fair value.
Case B: Gustafson paid $90,000 for a 20% interest in partnership capital.
Use both Bonus method and Goodwill method to analyze the problem. Prepare the Statement of Partners' Capital Balances, as well as the related journals prepared for the partnership.