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ACCT 213 Exercise (Chapter 12) Ready

The document contains 4 exercises from an accounting course. Exercise 1 requires preparing journal entries to record partners' investments in a partnership between Dala and Bala. Exercise 2 does the same for a partnership between Moon and Bill. Exercise 3 calculates the division of partnership income between Jam and Stephens. Exercise 4 provides a schedule for the liquidation of the ABC Partnership and distribution of cash to partners Alexa, Bitsy, and Coco.

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48 views4 pages

ACCT 213 Exercise (Chapter 12) Ready

The document contains 4 exercises from an accounting course. Exercise 1 requires preparing journal entries to record partners' investments in a partnership between Dala and Bala. Exercise 2 does the same for a partnership between Moon and Bill. Exercise 3 calculates the division of partnership income between Jam and Stephens. Exercise 4 provides a schedule for the liquidation of the ABC Partnership and distribution of cash to partners Alexa, Bitsy, and Coco.

Uploaded by

Mohammed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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KING ABDULAZIZ UNIVERSITY

FACULTY of ECONOMICS & ADMINISTRATION

ACCOUNTING DEPARTMENT

SECOND SEMESTER (2020/2021)

ACCT 213

Course Exercise (Chapter 12)

Instructor:
E-Mail:
Phone:
Office: -
Office Hours: -

Student’s Name Mohammed Khamis

Student’s Number 1945667

Page 1
EXERCISES (1)

Dala and Bala decide to organize a partnership. Dala invests $25,000 cash, and Bala
contributes $5,000 and equipment having a book value of $7,000 and a fair value of
$15,000.
Instructions: Prepare the entry to record each partner’s investment.

Account title Dr. Cr.

Cash 25000
Dala Capital 25000

Bala Equipment 15000


Cash 5000
Bala Capital 20000

EXERCISES (2)

Moon and Bill decide to form a partnership. Moon invests $35,000 cash and accounts
receivable of $30,000 less allowance for doubtful accounts of $2,000. Bill contributes
$25,000 cash and equipment having a $6,000 book value. It is agreed that the allowance
account should be $3,000 and the fair value of the equipment is $10,000.

Instructions: Prepare the necessary journal entry to record the formation of the
partnership.

Account title Dr. Cr.

Cash 60000
Acc rec 30000
Equipment 10000
Allowance 3000
Moon Capital 62000
Bill Capital 35000

Page 2
EXERCISES (3)

The Jam and Steph partnership reports net income of $50,000. Partner salary allowances
are Jam $18,000 and Stephens $12,000. Any remaining income is shared 60%:40%.

Instructions: Determine the amount of net income allocated to each partner.

Solution

Jam Stephens Total

Salary allowance 18000 12000 30000

Remaining income, 20000

Jam 12000

Steph 8000

Total division 30000 20000 50000

EXERCISES (4)

The ABC Partnership is to be liquidated and you have been hired to prepare a Schedule of
Cash Payments for the partnership. Partners Alexa, Bitsy, and Coco share income and
losses in the ratio of 4:3:3, respectively. Assume the following: 1) The noncash assets were
sold for $70,000. 2) Liabilities were paid in full. 3) The remaining cash was distributed to the
partners. (If any partner has a capital deficiency, assume that the partner is unable to make
up the capital deficiency.)

Instructions: Using the above information, complete the Schedule of Cash Payments below:

ABC PARTNERSHIP : Schedule of Cash Payments

Noncash Alexa Bitsy Coco

Item Cash + Assets = Liabilities + Capital + Capital + Capital

Balances before

liquidation 25,000 + 150,000 = 50,000 + 25,000 + 35,000 + 65,000

Page 3
Solution
ABC PARTNERSHIP

Schedule of Cash Payments

Noncash Alexa Bitsy Coco

Item Cash + Assets = Liabilities + Capital + Capital + Capital

Balances before

liquidation 25,000 + 150,000 = 50,000 + 25,000 + 35,000 + 65,000

Sale of noncash 70000 150000

assets (1)

New balance 95000 0

Pay liabilities (2) 50000 50000

New balances 45000 0

Allocate capital (32000) (24000) (24000)

deficiency -7000 11000 41000

New balances 45000 0 7500 37500

Cash distribution (3) 22500 22500

Final balances -0- -0- -0- -0- -0- -0-

Page 4

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