Ethical Case Study
Case Summary:
Dr. B and Dr. R are sole owners of two medical practices that operate in the same medical building. The two doctors agree to combine assets and liabilities of the two businesses to form a
To discuss: If Dr. R is acting in ethical manner and how Dr. B can renegotiate the partnership agreement to avoid the dispute?
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CENGAGENOW 6 TERMS ACCESS CARD 27TH ED.
- I did parts 1,2(on the excel it is shown as a b c ) already, and have attached them.. i need help with 3 and 4.. lemon and salt entered into a partnership to provide supply chain management and logistic services in the san francisco region of California. In their agreed Articles of Partnership, the partners acknowledged the following: Sharing of profits and losses: Compensate each partner $125 per hour for their billable hourly consulting work performed. lemon receives an additional $3,000 monthly as the partnership’s Chief Operating Officer (COO); salt receives an additional $2,500 monthly as the partnership’s Chief Technology Officer (CTO), Any remaining profits or losses are divided equally between the partners. Each partner is permitted but not required to withdraw no more than $800 per month from the partnership and such withdrawals will be accounted for as direct reductions of the withdrawing partner’s capital balance They will begin their partnership with equal…arrow_forwardJim Bond, a plumber, has been working for Fleming’s Plumbing Supplies for several years. Based on his hard work and the fact that he recently married Ivan Fleming’s daughter, Jim has been invited to enter into a partnership with Fleming. The new partnership will be called Fleming and Bond’s Plumbing Supplies. The terms of the partnership are as follows: (a) Fleming will invest the assets of Fleming’s Plumbing Supplies, and thepartnership will assume all liabilities. The market values of the office and store equipment are estimated to be $18,000 and $8,000, respectively. All other values reported on the balance sheet (shown below) are reasonable approximations of market values. Fleming has no knowledge of any uncollectible accounts receivable.(b) Bond will invest $50,000 cash.(c) Fleming will draw a salary allowance of $50,000 per year, and Bond willreceive $30,000.(d) Each partner will receive 10% interest on the January 1 balance of his capital account.(e) Profits or losses remaining…arrow_forwardWHAT HAPPENS IF A PARTNER BECOMES INSOLVENT? In 2010, three dentists-Ben Rogers, Judy Wilkinson, and Henry Walker-formed a partnership to open a practice in Toledo, Ohio. The partnership's primary purpose was to reduce expenses by sharing building and equipment costs, supplies, and the services of a clerical staff. Each contributed $70,000 in cash and, with the help of a bank loan, constructed a building and acquired furniture, fixtures, and equipment. Because the partners maintained their own separate clients, annual net income has been allocated as follows: Each partner receives the specific amount of revenues that he or she generated during the period less one-third of all expenses. From the beginning, the partners did not anticipate expansion of the practice; consequently, they could withdraw cash each year up to 90 percent of their share of income for the period. The partnership had been profitable for a number of years. Over the years, Rogers has used much of his income to…arrow_forward
- Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $30,000 and $39,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $19,000. a. Determine the recipient and amount of the partner bonus. b. Provide the journal entry to admit Solano into the partnership. If an amount box does not require an entry, leave it blank. c. Why would a bonus be paid in this situation? Apparently, Jenkins and Tanner value offered by Solano.arrow_forwardTerry Willard and Jasmine Hill decide to form a partnership. Willard will contribute $300,000 to the partnership, while hill will contribute only $30,000. However, Hill will be responsible for running the day-to-day operations of the partnership, which are anticipated to require about 45 hours per week. In contrast, Willard will only work five hours per week for partnership. The two partners are attempting to determine a formula for dividing partnership net income. Willard believes the partners should divide income in the ratio of 7:3, favoring Willard, since Willard provides the majority of the capital. Hill believes the income should divided 7:3, favoring Hill, since Hill provides the majority of effort in running the partnership business. How would you advise the partners in developing a method for diving income?arrow_forwardOn January 1, 2018, Dr. Marcie Cousins established Health-Wise Medical, a medical practice organized as a proprietorship. The following conversation occurred the following August between Dr. Cousins and a former medical school classmate, Dr. Avi Abu, at an American Medical Association convention in Seattle:Dr. Abu: Marcie, good to see you again. Why didn’t you call when you were in Miami? We could have had dinnertogether.Dr. Cousins: Actually, I never made it to Miami this year. My husband and kids went up to our Vail condo twice, but I got stuck in Jacksonville. I opened a new consulting practice this January and haven’t had any time for myself since.Dr. Abu: I heard about it . . . Health . . . something . . . right?Dr. Cousins: Yes, Health-Wise Medical. My husband chose the name.Dr. Abu: I’ve thought about doing something like that. Are you making any money? I mean, is it worth your time?Dr. Cousins: You wouldn’t believe it. I started by opening a bank account with $25,000, and my…arrow_forward
- Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $78,000 and $46,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $32,000. Determine the recipient and amount of the partner bonus. Provide the journal entry to admit Solano into the partnership. For a compound transaction, if an amount box does not require an entry, leave it blank.arrow_forwardCody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $78,000 and $46,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings.Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $32,000.a. Determine the recipient and amount of the partner bonus.b. Provide the journal entry to admit Solano into the partnership.c. Why would a bonus be paid in this situation?arrow_forwardJim Bond, a plumber, has been working for Fleming’s Plumbing Supplies for several years. Based on his hard work and the fact that he recently married Ivan Fleming’s daughter, Jim has been invited to enter into a partnership with Fleming. The new partnership will be called Fleming and Bond’s Plumbing Supplies. The terms of the partnership are as follows: a) Fleming will invest the assets of Fleming’s Plumbing Supplies, and the partnership will assume all liabilities. The market values of the office and store equipment are estimated to be $18,000 and $8,000, respectively. All other values reported on the balance sheet are reasonable approximations of market values. Fleming has no knowledge of any uncollectible accounts receivable. b) Bond will invest $50,000 cash. c) Fleming will draw a salary allowance of $50,000 per year, and Bond will receive $30,000. d) Each partner will receive 10% interest on the January 1 balance of his capital account. e) Profits or losses remaining after…arrow_forward
- The Ace and Deuce partnership has been created to operate a law firm. The partners are attempting to devise a fair system to allocate profits and losses. Ace plans to work more billable hours each year than Deuce. However, Deuce has more experience and can charge a higher hourly rate. Ace expects to invest more money in the business than Deuce. Required Build a spreadsheet that can be used to allocate profits and losses to these two partners each year. The spreadsheet should be constructed so that the following variables can be entered: Net income for the year. Number of billable hours for each partner. Hourly rate for each partner. Capital investment by each partner. Interest rate on capital investment. Profit and loss ratio. Use this spreadsheet to determine the allocation if partnership net income for the current year is $200,000, the number of billable hours is 2,000 for Ace and 1,500 for Deuce, the hourly rate for Ace is $20 and for Deuce is $30, and investment by Ace is $80,000…arrow_forwardWhat should Figueroa's total profit share be for the year ended December 31, 2016? * Figueroa and Aguhob are partners in a CPA Review School. They share profits in the ratio of 2:1. On July 1, 2016 they admitted Figueroa's son Doblas as a partner. Figueroa guaranteed that Doblas' profit share would not be less than P25,000 for the six months to Dec. 31, 2016. The profit sharing arrangements after Doblas' admission is as follows: Figueroa 50%, Aguhob 30% and Doblas 20%. The profit for the year ended Dec.31, 2016 was P240,000 accruing evenly over the year. What should Figueroa's total profit share be for the year ended Dec. 31, 2016? Your answer Share premium Effective April 27, 2016, the shareholders of Fernando Corp, approved a 2-for-1 solu of the corporation's ordinary shares, and an increase in authorized ordinary shate from 100,000 shares to 200,000 shares. Fernando's shareholders' equity accounte immediately before issuance of the share split shares were as follows: Ordinary…arrow_forwardOn January 1st, 2018, Dr. Marcie Cousins established Health-Wise Medical, a medical practice organized as a proprietorship. The following conversation occurred the following August between Dr. Cousins and a former medical school classmate, Dr. Avi Abu, at an American Medical Association convention in Seattle. Dr. Abu: Marcie, good to see you again. Why didn't you call when you were in Miami? We could have had dinner together. Dr. Marcie Cousins: Actually, I never made it to Miami this year. My husband and kids went up to our Vail condo twice, but I got stuck in Jacksonville. I opened a new consulting practice this January and haven't had any time for myself since. Dr. Abu: I hear about it....Health....something....right? Dr. Marcie Cousins: Yes, Health-Wise Medical. My husband chose the name. Dr. Abu: I've thought about doing something like that. Are you making money? I mean, is it worth your time? Dr. Marcie Cousins: You wouldn't believe it. I started by opening a bank…arrow_forward
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