Explanation From: XYZ To: L W Counsel Dt: 9 th February, 2018 Sub: Suggestion in the formation of final agreement. The operating agreement in a LLC plays a vital role in setting up of a business. Here Mr. LW is funding the business where other two members contribute their effort and expertise. In this type of arrangement often conflicts arises as the interest of the investor differs from the interests of the members who operates the LLC. So following are the suggestions to LW Counsel for forming the final agreement. (1) All matters should not be settled by majority of votes, as there is a chance that two non-investing members’ vote may block interest of LW...

27th Edition

ISBN: 9781337272094

Author: WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher: Cengage Learning,

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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm …

Partner Admission and Withdrawal

Question

Chapter 12, Problem 12.3CP

To determine

To Suggest: the final agreement for L.W.

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Chapter 12, Problem 12.1CP

Chapter 12, Problem 12.4CP

Chapter 12 Solutions

Accounting

Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Prob. 9DQ Ch. 12 - Prob. 10DQ

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The partnership of Arun, Margot, and Tammy has been doing well. Arun wants to retire and move to another state for a once-in-a-lifetime opportunity. The partners capital balances prior to Aruns retirement are $60,000 each. Prepare a schedule showing how Aruns withdrawal should be divided assuming his buyout is: A. $70,000 B. $45,000 C. $60,000. In addition, show the resulting entries to the capital accounts of each of the three.
The partnership of Michelle, Amal, and Maureen has done well. The three partners have shared profits and losses in a 1:3 ratio, with capital balances of $60,000 each. Maureen wants to retire and withdraw. Prepare a schedule showing how the cost should be divided if Amal and Michelle decide to pay Maureen $70,000 for retirement of her capital account and the new agreement will share profits and losses 50:50.
The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partners new agreement will share profit and loss in a 1:3 ratio.

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