Car and Lam establish an equal partnership in both equity and profits to operate a used-furniture business under the name of C&L Furniture. Car contributes furniture inventory that cost $120,000 and has fair value of $160,000. Lam contributes $60,000 cash and delivery equipment that cost $80,000 and has a fair value of $60,000. Required Assume that the initial noncash contributions of the partners are recorded at fair market value. Compute the ending balance of each capital account under the bonus and goodwill approaches.

Question

Car and Lam establish an equal partnership in both equity and profits to operate a used-furniture business under the name of C&L Furniture. Car contributes furniture inventory that cost $120,000 and has fair value of $160,000. Lam contributes $60,000 cash and delivery equipment that cost $80,000 and has a fair value of $60,000.

Required

Assume that the initial noncash contributions of the partners are recorded at fair market value. Compute the ending balance of each capital account under the bonus and goodwill approaches.

Expert Answer

Want to see the step-by-step answer?

See Answer

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

See Answer
*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.
Tagged in
BusinessAccounting

Financial Management

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A

Q: Are the answers correct?

A: 9.Variable overhead rate variance: The difference between the actual variable overhead rate and stan...

Q: Calculate basic EPS Net income was $659,250 for the year. Throughout the year the company had outsta...

A: Earnings per share (EPS):Earnings per share is the monetary earnings available to shareholder per co...

Q: Mercer Asbestos Removal Company removes potentially toxic asbestos insulation and related products f...

A: Click to see the answer

Q: Bergan Company estimates that total factory overhead costs will be $1,539,000 for the year. Direct l...

A: Answers for the given 3 requirements are as follows: 

Q: Ivanhoe Co. sells $396,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and Ju...

A: The price of bond and ammortization schedule is as follows : NOTE :  ONLY THE AMMORTIZATION SCHEDULE...

Q: Bonds payable—various issues On July 1, 2016, $12 million face amount of 7%, 10-year bonds were issu...

A: Bonds are the debt instruments which are issued by corporates against certain sum of money and carry...

Q: How do I find what the net increase or decrease is in cash on a Statement of Cash Flow?

A: Add the net cash flows from all three activities of statement of cash flows (i.e. operating activiti...

Q: Global Marine obtained a charter from the state in January that authorized 1,000,000 shares of commo...

A: 1. The stock has been issued at $60. Given par value is $5. SO, excess paid in capital =$60-$5= $552...

Q: Which of the following is not a condition that must be satisfied before interest capitalization can ...

A: Capitalized Interest: Interest is usually paid on the amount borrowed and it is shown as an expense ...