Name:
Problem (1)
1. Capital, Brian:
Dr\ Cash
20,000
Dr\ Inventory
15,000
Dr\ Equipment
67,000
Cr\ Capital, Brian
102,000
Capital, Wendy:
Dr\ Cash
50,000
Dr\ Land
120,000
Cr\ Mortgage Payable
40,000
Cr\ Capital, Wendy
130,000
2. Allocated Net Loss (24,000)
Interest
Salary
Remaining
Total Allocation
Brian
10,200
15,000
(32,880)
(7,680)
Wendy
13,000
20,000
(49,320)
(16,320)
Capital, Brian after Loss:
102,000 - 7,680 = 94,320
Capital, Wendy after Loss:
130,000 - 16,320 = 113,680
3. Admission Alan:
Total capital: 94,320 + 113,680 + 70,000 = 278,000
Alan interest: 278,000 x 30% = 83,400
Bonus to Alan is 13,680
 Allocate (13,680) to Brian &Wendy:
▪
Brian: 13,680 x 40% = (5,360)
▪
Wendy: 13,680 x 60% = (8,040)
1
Total
23,200
35,000
(82,200)
(24,000)
Dr\ Cash
70,000
Dr\ Capital, Brian
5,360
Dr\ Capital, Wendy
8,040
Cr\ Capital, Alan
83,400
4. Allocated Net income: 150,000
Brian
20%
30,000
Wendy
50%
75,000
Dr\ Income summary
Alan
30%
45,000
150,000
Cr\ Capital, Brian
30,00
Cr\ Capital, Wendy
75,000
Cr\ Capital, Alan
45,000
5. Capital, Brian after allocate net income: 94,320 - 5,360 + 30,000 = 118,960
Brian Received: 40,000 + 60,000 = 100,000
The bonus (18,960):
 Capital, Wendy: 18,960 x 5\8 = 11,850
 Capital, Alan: 18,960 x 3\8 = 7,110
Dr\ Capital, Alan
118,960
Cr\ Cash
100,000
Cr\ Capital, Brian
11,850
Cr\ Capital, Wendy
7,110
Problem (2)
Balance
Realization
Balance
Payment Liabilities
Balance
Payment to partners
Balance
Assets
Cash
Non-Cash
70000
260,000
270,000
(260,000)
340,000
0
(98,000)
242,000
(242,000)
0
0
Liabilities
98,000
98,000
(98,000)
0
0
2
John
90,000
3,000
93,000
Equity
Jake
78,000
4,000
82,000
Joe
64,000
3,000
67,000
93,000
(93,000)
0
82,000
(82,000)
0
67,000
(67,000)
0
Problem (3)
1. Net income is to be allocated 60% to Day and 40% to Night:
Day: 68,400 x 60% = 41,040
Night: 68,400 x 40% = 27,360
2. Net income is to be allocated in the ratio of ending capital balances:
Day: 68,400 x (112,500 \ 159,375) = 48,282
Night: 68,400 x (46,875 \ 159,375) = 20,118
3. Net income is to be allocated in the ratio of average capital balances:
Average capital balances (Day): (85,938)
▪
75,000 x 3\12 = 18,750
▪
56,250 x 2\12 = 9,375
▪
93,750 x 5\12 = 39,063
▪
112,500 x 2\12 = 18,750
Average capital balances (Night): (44,532)
▪
37,500 x 6\12 = 18,750
▪
56,250 x 3\12 = 14,063
▪
46,875 x 3\12 = 11,719
 Day: 68,400 x (85,938\ 130,470) = 45,054
 Night: 68,400 x (44,532\ 130,470) = 23,346
4. Interest of 15% is to be granted on average capital balances, salaries of $15,000 and $8,250 are to
be allocated to Day and Night, respectively, and the remainder is to be divided equally.
Salary
Interest (15%)
Remaining
Total Allocated
Day
15,000
12,891
12,790
40,681
Assets
Cash
Non-Cash
Night
8,250
6,680
12,790
27,720
Liabilities
Alt
3
Total
23,250
19,571
25,579
68,400
Equity
Blue
Cha
10,000
26,000
36,000
(36,000)
0
22,000
22,000
(6,000)
16,000
(16,000)
0
20,000
20,000
(20,000)
0
2,000
2,000
(2,000)
0
90,000
(22,000)
68,000
68,000
20,000
48,000
42,000
42,000
(36,000)
6,000
6,000
(6,000)
0
48,000
48,000
(30,000)
18,000
18,000
(18,000)
0
0
0
34,000
1,600
35,600
10,000
1,600
11,600
14,000
800
14,800
35,600
800
36,400
11,600
800
12,400
14,800
400
15,200
36,400
(12,667)
23,733
(4,000)
19,733
(12,533)
7,200
(6,400)
800
(800)
0
12,400
15,200
(3,333)
11,867
(2,000)
9,867
(6,267)
3,600
(3,200)
400
(400)
0
12,400
(4,000)
8,400
(1,200)
7,200
(6,400)
800
(800)
0
Safe Payment (1):
Net capital
Potential Loss (48,000)
Ballance
Allocate Deficit (6,800)
Allocate Cash
Alt
36,400
(19,200)
17,200
(4,533)
12,667
Blue
12,400
(19,200)
(6,800)
6,800
Cha
15,200
(9,600)
5,600
(2,267)
3,333
Alt
19,733
(7,200)
12,533
Blue
8,400
(7,200)
1,200
Cha
9,867
(3,600)
6,267
Safe Payment (2):
Net capital
Potential Loss (18,000)
Ballance
4