Solutions 1~

Solutions 1~ - Quick Study D-1 (10 minutes) a. The...

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Quick Study D-1 (10 minutes) a. The partnership will need to pay because it is a merchandising firm. That is, if the vendor knows nothing to the contrary, the vendor can assume that Leon has the right, because of mutual agency, to bind the firm to contracts for the purchase of merchandise. b. A public accounting firm is not in the merchandising business. Consequently, because the purchase of merchandise to be sold is not within the normal scope of the business of this firm, the vendor has no right to assume Leon is acting as the agent for the partnership. Hence, the partnership probably will not have to pay. Quick Study D-2 (15 minutes) Stolton Bright Total Net income . .......................................... 52,000 Salary allowances Stolton . .............................................. $15,000 Bright . ................................................ $20,000 Total salary allowances . .................. 35,000 Balance of income . ............................. 17,000 Balance allocated equally Stolton . .............................................. 8,500 Bright . ................................................ 8,500 Total allocated equally . .................... 17,000 Balance of income . ............................. ______ ______ $ 0 Shares of the partners $23,500 $28,500 Quick Study D-3 (10 minutes) If Blake is allocated a $100,000 salary allowance and there remains $4,000 to be divided equally, giving Matthai $2,000, then this shows that the partnership must have earned net income of $104,000.
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Quick Study D-4 (10 minutes) Since Mourlan is a limited partner, he is not personally liable for any unpaid debts of the partnership. Therefore, the partnership’s creditors cannot pursue Mourlan’s personal assets. Quick Study D-5 (10 minutes) Choi, Capital . ........................................................................... 10,000 Amal, Capital . .......................................................................... 10,000 Stein, Capital . ..................................................................... 20,000 To record admission of Stein by purchase. Quick Study D-6 (10 minutes) Cash . ........................................................................................ 40,000 Kwon, Capital . .................................................................... 40,000 To record admission of Kwon. Quick Study D-7 (15 minutes) Total partnership return on equity = Net Income/Average equity = $25,000 / ($150,000 + $200,000)/2 = $25,000 / $175,000 = 14.3% Howe partner return on equity = Partner net income/Average partner equity = $20,000 / ($100,000 + $140,000)/2 = $20,000 / $120,000 = 16.7% Duley partner return on equity = Partner net income/Average partner equity = $5,000 / ($50,000 + $60,000)/2 = $5,000 / $55,000 = 9.1%
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Exercise D-3 (25 minutes) 1a. 2008 Mar. 1 Cash . ........................................................................ 82,500 Land . ........................................................................ 60,000 Building . .................................................................. 100,000
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This note was uploaded on 01/18/2010 for the course MGMT 1b taught by Professor Ravetch during the Fall '08 term at UCLA.

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Solutions 1~ - Quick Study D-1 (10 minutes) a. The...

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