A1 Partnership Operation Quiz Solution.xlsx

A1 Partnership Operation Quiz Solution.xlsx

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Advanced Accounting Part 1 Partnership Operation Quiz Problem 1 Computation of partners' interest in average capital Average capital AA Beginning Capital 96,000 Changes on Capital 12,000 Average capital 108,000 Interest rate 12% Interest on average capital 12,960 1.) Partners' share in net income AA Salaries 14,400 Interest 12,960 Remainder (1,200) Share in net income 26,160 2.) Partners' capital balances AA Capital - beg 96,000 Additional investment 24,000 Net income 26,160 Withdrawal (9,000) Capital balances 137,160 3.) Partners' share in net income AA Interest 12,960 Remainder (1,200) Share in net income after salaries 11,760 Net income before salaries Less: Salaries Net income after salaries 4.) Partners' capital balances AA Capital - beg 96,000 Additional investment 24,000 Salaries 14,400 Net income 11,760 Withdrawal (9,000)
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Capital balances 137,160 Note: Change in treatment of the salaries won't change Partners' Capital Balances Problem 2 Reported Net income a.) Overstated depreciation b.) Merchadise inventory 2015 Understated 2016 Understated c.) Purchases 2015 - Purchases - understated / Ending inventory - understated
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