AC116 Unit 6 Lab Assignment
Question 2 of 10
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Pharoah Co. reports net income of $73,000. Partner salary allowances are Pitts $11,000, Filbert $8,000, and Witten $6,000. Indicate the division of net income to each partner, assuming the income ratio is 55 : 26 : 19, respectively.
Division of Net Income
Pitts
Salary allowance
Filbert
Witten
Total
$
$
$
$
$
$
$
$
Remaining income
Total division of net income
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AC116 Unit 6 Lab Assignment
Question 3 of 10
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Nabb & Fry Co. reports net income of $25,000. Interest allowances are Nabb $5,000 and Fry $4,000, salary allowances are Nabb $14,000 and Fry $10,000, and the remainder is shared equally. Show the distribution of income. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).)
Division of Net Income
Nabb
Salary allowance
Fry
Total
$
$
$
$
$
$
Interest allowance
Remaining excess/deficiency
Total division of net income
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AC116 Unit 6 Lab Assignment
Question 6 of 10
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K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is transferring $45,000 of personal cash to the partnership. Rosen
owns land worth $10,000 and a small building worth $75,000, which she transfers to the partnership. Toso transfers to the
partnership cash of $10,000, accounts receivable of $27,000, and equipment worth $14,000. The partnership expects to collect
$24,300 of the accounts receivable.
(a)
Prepare the journal entries to record each of the partners’ investments. (Credit account titles are automatically indented when
amount is entered. Do not indent manually.)
Account Titles and Explanation
Debit
Credit
(To record investment of Decker.)
(To record investment of Rosen.)
(To record investment of Toso.)
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(b)
What amount would be reported as total owners’ equity immediately after the investments?
Total owners’ equity
$
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AC116 Unit 6 Lab Assignment
Question 7 of 10
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The post-closing trial balances of two proprietorships on January 1, 2022, are presented below.
Sorensen Company
Lucas Company
Dr.
Dr.
Cash
$17,000
Accounts receivable
21,500
Allowance for doubtful accounts
Cr.
32,000
$3,700
Inventory
33,000
Equipment
56,000
Cr.
$14,900
$5,500
22,800
36,000
Accumulated depreciation—equipment
29,800
13,600
Notes payable
22,300
18,600
Accounts payable
27,300
38,400
Sorensen, capital
44,400
Lucas, capital
29,600
$127,500
$127,500
$105,700
$105,700
Sorensen and Lucas decide to form a partnership, Cullumber Company, with the following agreed upon valuations for noncash assets.
Sorensen Company
Lucas Company
$21,500
$32,000
Accounts receivable
Allowance for doubtful accounts
5,600
5,000
Inventory
34,700
24,800
Equipment
31,000
18,600
All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships.
(a)
Prepare separate journal entries to record the transfer of each proprietorship’s assets and liabilities to the partnership. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date
Account Titles and Explanation
Debit
Credit
Drop down options:
– Accumulated depricitaion- equipment
– Inventory
– Lucas, Capital
– Equipment
– Allowance for doubtful accounts
– Sorensen, Capital
– Notes Payable
– Accounts receivable
– Accounts payable
– Cash
Jan. 1
(Transfer of Sorensen’s assets and liabilities.)
Jan. 1
(Transfer of Lucas’ assets and liabilities.)
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(b)
Further, it is agreed that Sorensen will invest an additional $6,200 in cash, and Lucas will invest an additional $23,600 in cash. Journalize the additional cash investment by each partner. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No.
Account Titles and Explanation
Debit
Credit
Jan. 1
(To record Sorensen’s investment.)
Jan. 1
(To record Lucas’ investment.)
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(c)
Prepare a classified balance sheet for the partnership on January 1, 2022. (List Current Assets in order of liquidity.)
AC116 Unit 6 Lab Assignment
Question 7 of 10
CULLUMBER COMPANY
Balance Sheet
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Assets
$
$
:
$
Liabilities and Owners’ Equity
$
$
$
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AC116 Unit 6 Lab Assignment
Question 8 of 10
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At the end of its first year of operations on December 31, 2022, Crane Company’s accounts show the following.
Partner
Drawings
Capital
Art Niensted
$28,980
$60,480
Greg Bolen
11,844
37,800
Krista Sayler
12,600
31,500
The capital balance represents each partner’s initial capital investment. Therefore, net income or net loss for 2022 has not been closed to the partners’ capital accounts.
(a)
Journalize the entry to record the division of net income for the year 2022 under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
1.
Net income is $37,800. Income is shared 6:3:1.
2.
Net income is $50,400. Niensted and Bolen are given salary allowances of $18,900 and $12,600, respectively. The remainder is shared equally.
3.
Net income is $23,940. Each partner is allowed interest of 10% on beginning capital balances. Niensted is given a $18,900 salary allowance. The remainder is shared equally.
No.
Account Titles and Explanation
Debit
Credit
1.
2.
3.
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(b)
Prepare a schedule showing the division of net income under assumption (3) above. (If an amount reduces the account balance then enter with a negative sign preceding the number e.g. -15,000 or parenthesis e.g. (15,000).)
DIVISION OF NET INCOME
Art Niensted
Salary allowance
Greg Bolen
Krista Sayler
$
Total
$
Interest allowance on capital
Total salaries and interest
Remaining excess/ deficiency
Total division of net income
$
$
$
$
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(c)
Prepare a partners’ capital statement for the year under assumption (3) above. (List items that increase partners capital first.)
CRANE COMPANY
Partners’ Capital Statement
Art Niensted
Greg Bolen
Krista Sayler
Total
$
$
$
$
$
$
$
$
:
:
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