Reference no: EM133005074
Question -
Q1. Jasmine Partnership began its first year of operations with the following capital balances:
J, Capital: $143,000
A, Capital: $104,000
S, Capital: $143,000
The Articles of Partnership stipulated that profits and losses be assigned in the following manner:
- J was to be awarded an annual salary of $26,000 with $13,000 salary assigned to S
- Each partner was to be attributed with interest equal to 10% of the capital balance as of the first day of the year
- The remainder was to be assigned on a 4:3:3 basis, respectively.
- Each partner was allowed to withdraw up to $13,000 per year.
If the net loss for the first year of operations was $36,000 with net income of $42,000 in the second year. Assume also that each partner withdrew the maximum amount from the business each year.
a. How much was the share of income or loss for the first year of S?
b. How much was the balance in the capital account at the end of the second year of S?
Q2. On December 31, 2020, the Statement of Financial Position of EYBISI Partnership with profit or loss ratio of 6:1:3 of partners Anna, Belle, and Cassie respectively, revealed the following data:
Cash - 1,000,000 Other Liabilities - 2,000,000
Receivable from Anna - 500,000 Payable to Belle - 1,000,000
Other non-cash assets - 2,000,000 Payable to Cassie - 100,000
Anna, Capital 700,000
Belle, Capital (650,000)
Cassie, Capital 350,000
On January 1, 2021, the partners decided to liquidate the partnership. All partners are legally declared to be personally insolvent. The other non-cash assets were sold for $1,500,000. Liquidation expenses amounting to $100,000 were incurred.
a. What amount of cash was received by Belle at the end of partnership liquidation?
b. What amount of cash was received by Anna at the end of partnership liquidation?