Statement of changes in partners capital accounts

Assignment Help Accounting Basics
Reference no: EM13974149

Lancaster and Reed are partners in a successful sporting goods store. Their profit and losssharing agreement stipulates that interest of 10% is to be allowed on beginning capitalbalances, that annual salaries of $40,000 to Lancaster and $29,000 to Reed are to be paid,and that any remaining profit or loss is to be shared 2:1 between Lancaster and Reed.The January 1, Year 5, condensed balance sheet is shown below:LANCASTER AND REEDBALANCE SHEETJanuary 1, Year 5AssetsCash $ 10,000Inventory 475,000Office equipment - net 25,000Other assets 5,000$515,000LiabilitiesAccounts payable $211,000Sales tax payable 9,000$220,000Partners' equityLancaster $190,000Reed 105,000$295,000$515,000During Year 5, the partnership earned $130,000 before partners' salary and interest,and Lancaster and Reed had drawings of $50,000 and $60,000 respectively. On January 1, Year 6, the partnership decided to admit Jackson as a partner with a25% interest in the partnership for a cash contribution of $125,000. The bonus methodwas used to admit Jackson.The profit and loss sharing agreement was amended as follows:

  • Interest of 12% on beginning capital.
  • Annual salaries of $40,000 to Lancaster and $31,200 to Reed.
  • Remaining profit or loss to be shared in a 2:1:1 ratio by Lancaster, Reed, andJackson.The partnership reported profit before partners' interest and salary of $180,000 inYear 6, and each partner withdrew $50,000.

Required:

Prepare, in good form, a statement of changes in partners' capital accounts from January1, Year 5, to December 31, Year 6. Show your calculations.

Reference no: EM13974149

Questions Cloud

Create a loan amortization schedule : Create a loan amortization schedule using Excel for a $15,000 car loan that will be repaid over 60 months at an annual interest rate of 6%. What is your monthly payment?
What are some resources that can be used besides : What are some  resources that can be used besides the school library?
Fix jobs using each of the following scheduling algorithms. : Using the given information, calculate which jobs will have arrived ready for processing by the time the first job is finished or interrupted using each of the following scheduling algorithms.
Utilizing one of the internet search engines : Utilizing one of the internet search engines, find an organization that has recently been forced to increase or decrease capacity dramatically to align with customer demand. Discuss specifically the key drivers for the change in demand along with the..
Statement of changes in partners capital accounts : Prepare, in good form, a statement of changes in partners' capital accounts from January1, Year 5, to December 31, Year 6. Show your calculations.
An income statement for the year ended december : A schedule of cost of goods manufactured for the year ended December 31. An income statement for the year ended December 31.
Provide clear claim that states what actions should be taken : Choose a stance and argue a position on what school reform is needed regarding the time of days, number of days, or calendar arrangement. Provide a clear claim that states what actions should be taken
Training and developmentfinal : Training and DevelopmentFinal ProjectNow it's your turn! Below is all the information given on a training program needed, called Effective Communication. You are a trainer in the given situation. Submit all of the following: 1.   Training Needs Asses..
Sheet to print as an attendance report for administration : In this project, you will work on an attendance log for a 16-week college course. For one section of the course, you will set up the sheet to print as an attendance sign-in sheet.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Total current assets are worth 237513 at book value and

total current assets are worth 237513 at book value and 191299 at market value. in addition plant and equipment has a

  Hazelnut company earned net income of 95000 during the year

hazelnut company earned net income of 95000 during the year ended december 31 2012. on december 15 hazelnut declared

  What amount if any is michael entitled to deduct

Michael owns stock in an S corporation. The corporation sustained a net operating loss this year. Michael's pro rata share of the loss is $5,000.

  Following transactions during its first year of operations

Isabel Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations.

  On march 1st stephanie meyer a writer received an advance

on march 1st stephanie meyer a writer received an advance from her publisher for a short story to add to the twilight

  Kabana company a manufacturer of stereo systems started its

kabana company a manufacturer of stereo systems started its production in october 2012. for the preceding 3 years

  What are some of the significant variables that you can

1. what are some of the significant variables that you can plug into a cost-volume-profit spreadsheet?2. how would you

  Compute the cash proceeds from bond issues

Snow, Inc., issued $80,000 of four year, 8 percent bonds at 96.

  Three primary causes of cash flow problems

1. What are the three primary causes of cash flow problems faced by a small business? Explain cash flow  management using the cash-to-cash cycle.  What are the three sources from which cash can be obtained for a business?

  Isbn 978-0-07-352694-2the question is 20-38 on page

isbn 978-0-07-352694-2the question is 20-38 on page 920-921ramon martinez is the general manager of classic inn a

  Determine norm inclusion amount

On june 1, 2009, norm leases a taxi and places it in service. the lease payments are $1,000 per month. assuming the dollar amount from the irs table is $241, determine norm's inclusion amount.

  Audit failure

The "audit failure" issue is one that we should all be concerned about, but in doing so, we need to separate reality from urban myth while we still have the time (Pat McDonnell)

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd