Reference no: EM132896870
Question -
A. The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business's profit or loss in the following sequence:
-Jones, the managing partner, receives a bonus equal to 15 percent of the business's profit.
-Each partner receives 17 percent interest on average capital investment.
-Any residual profit or loss is divided equally.
The average capital investments for 2018 were as follows:
Jones $115,000
King 230,000
Lane 345,000
How much of the $54,000 partnership profit for 2018 should be assigned to each partner?
B. The Distance Plus partnership has the following capital balances at the beginning of the current year:
Tiger (40% of profits and losses) $90,000
Phil (30%) 60,000
Ernie (30%) 75,000
Each of the following questions should be viewed independently.
-If Sergio invests $70,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used.
-If Sergio invests $50,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used.
-If Sergio invests $60,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the goodwill method is used.
C. The E.N.D. partnership has the following capital balances as of the end of the current year:
Pineda $300,000
Adams 260,000
Fergie 230,000
Gomez 210,000
Total capital $1,000,000
Answer each of the following independent questions:
-Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $270,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners?
-Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $350,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners? (Do not round your intermediate calculations. Round your final answers to the nearest dollar amounts.)