LO.2 In the current year, Bill Parker (54 Oak Drive, St. Paul, MN 55164) is considering making an investment of $60,000 in Best Choice
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CengageNOWv2, 1 term Printed Access Card for Hoffman/Young/Raabe/Maloney/Nellen's South-Western Federal Taxation 2018: Individual Income Taxes, 41st
- Juan, Pedro and Pablo agreed to form a partnership on June 1, 2022. Juan contributed inventory costing P50,000 with fair market value of P80,000; Pedro contributed a building with fair market value of P500,000. The partners agreed to record the building at P400,000. Pablo would like to have a 40% interest in the partnership. How much cash should Pablo invest?arrow_forwardJosiah Barlow, Patty DuMont, and Owen Maholic are contemplating the formation of a partnership. According to the partnership agreement, Barlow is to invest $60,000 and devote one-half time, DuMont is to invest $40,000 and devote three-fourths time, and Maholic is to make no investment and devote full time. Would Maholic be correct in assuming that since he is not contributing any assets to the firm, he is risking nothing? Explain.arrow_forwardAn existing partnership (Jim and Jerry) wants to expand their services to include a rare and specialized service. This service will generate more revenue than other services since it is so specialized and they will be the only one to offer the service in their state. They find an individual (Bob) who has this specialized skill and asks him to become a partner in their partnership. Bob agrees but is requesting a $60,000 interest in the partnership for a $30,000 cash investment. Is this possible? If so how would the accountant go about accounting for the $30,000 difference between the interest Bob will receive and the cash he is investing?arrow_forward
- Choose the correct.The capital balance for Messalina is $210,000 and for Romulus is $140,000. These two partners share profits and losses 60 percent (Messalina) and 40 percent (Romulus). Claudius invests $100,000 in cash in the partnership for a 20 percent ownership. The bonus method will be used. What are the capital balances for Messalina, Romulus, and Claudius after this investment is recorded?a. $216,000, $144,000, $90,000b. $218,000, $142,000, $88,000c. $222,000, $148,000, $80,000d. $240,000, $160,000, $100,000arrow_forwardE12-15 Nan Fuentes has been operating an apartment-locator service as a prietorship. She and Misti Fulmer have decided to form a partnershi Fuentes's investment consists of cash, $8,000; accounts receivabie $10,000; furniture, $1,000; a building, $55,000; and a note payable. $10,000. To determine Funtes's equity in the partnership, she and Fulmer hime an independent appraiser. The appraiser values all the assets and liabi ties at their book value except the building, which has a current marka value of $90,000. Also there are accounts payable of $3,000. Requirement Make the entry on the partnership books to record Fuentes's investment (pр. 600-601)arrow_forwardI asked this question earlier but they answered as if the net income was $280,000 and not $270,000. Could you possibly help and show me how to do it with a net income of $270,000? Dividing Partnership Income Beau Dawson and Willow McDonald formed a partnership, investing $116,000 and $174,000, respectively. Determine their participation in the year's net income of $270,000 under each of the following independent assumptions: a. No agreement concerning division of net income.b. Divided in the ratio of original capital investment.c. Interest at the rate of 5% allowed on original investments and the remainder divided in the ratio of 2:3.d. Salary allowances of $40,000 and $50,000, respectively, and the balance divided equally.e. Allowance of interest at the rate of 5% on original investments, salary allowances of $40,000 and $50,000, respectively, and the remainder divided equally. Dawson McDonald a. $fill in the blank 1 $fill in the blank 2 b. $fill in the blank 3 $fill in the…arrow_forward
- Donna, Rick, and Daisy are partners sharing profits in a 3:3:4 ratio, respectively. They have been overwhelmed by the amount of work recently and have agreed to admit Bud to the partnership for a cash investment. The current balances in their capital accounts are P60,000, P80,000, and P120,000, respectively. 13. Assuming Bud is given a 20% interest in the partnership for an P80,000 cash investment, the entry to record his investment includes a: a. credit to Bud, capital for P80,000 b. debit to loss on sale of partnership interest for P12,000 C. debit to Daisy, capital for P4,800 d credit to Donna, capital for P3,600 14. Assuming Bud is given a 15% interest in the partnership for a P70,000 cash investment, the entry to record his investment includes a: a. credit to Donna, capital for P6,150 b. credit to Bud, capital for P70,000 C. debit to Rick, capital for P6,150 d. credit to gain on sale of partnership interest for P20,500arrow_forwardFill in the blanks: Rodriguez and Ying started a partnership on July 1, 2019. Ying contributes P5,000 cash; accounts receivable recorded value of P50,000 with allowance for doubtful accounts at P5,000, and a piece of land purchased at P200,000 with attached mortgage to a bank for P100,000, but its current market value is at P400,000. The mortgage will be assumed by the partnership. a. In the Partnership books, Accounts Receivable will be debited at an amount of b. In the Partnership books, Land will be debited at an amount of c. In the Partnership books, Ying, Capital will be credited forarrow_forwardAnwar and Bravo wish to form the A&B partnership. Anwar contributes land with a book value of $ 175,000 (current value of $200,000) and a building with a book value of $200,000 (current value of $300,000). Bravo will contribute cash. If the partners plan to share profits and losses equally after the formation of the partnership and assuming they have agreed to equal capital contributions, how much cash will Bravo have to contribute to form the partnership? Pass Journal entry to be recorded in A&B Firmarrow_forward
- Ana, Bea and Carol decided to form a partnership contributing the following items. Ana is to invest her existing business in the partnership consisting of the following accounts; cash of P20,000; accounts receivable of P50,000; inventory P30,000; fixtures of P40,000; payables of P12,000. Bea on the other hand is to invest cash of P15,000 and a delivery truck costing P30,000 but is mortgaged with the bank for P20,000. The partners agree that the receivables will re have a 90% realizable value. The inventory would be valued at P20,000. P5,000 of the payables would be paid prior to the formation of the partnership. The delivery truck would have a 20% increase in its market value. The partnership will shoulder only 80% of the mortgage and Carol is to invest cash to be able to have a 40% interest in the partnership.How much cash should Carol invest in the newly formed partnership?A. 61,200 B. 138,000 C. 60,800 D. 102,000arrow_forwardOn December 1, 2020, Louie and Kaye Ann formed a partnership, agreeing to share for profits and losses in the ratio of 2:3, respectively. Louie invested a parcel of land that cost him P25,000. Kaye Ann invested P30,000 cash. The land was sold for P50,000 on the same date, three hours after formation of the partnership. How much should be the capital balance of Louie right after formation?a. P25,000 c. P60,000b. 30,000 d. 50,000arrow_forwardFill in the blnnks: Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio. Tim contributes P7500 cash and merchandise invetory with a market value of P1500. a. Tim, Capital will be credited in the amount of b. Michelle's investment should be c. After accounting for the total investments of Tim and Michelle, the total assets of the partnership amounts toarrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT