12 - Class Exercises - partnership earned net income of...

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ACC211 Mitchell NVCC-Annandale Chapter 12 Class Exercises 1) Candy and Cane decide to merge their proprietorships into a partnership called Candy Cane Company. The balance sheet of Candy shows: Accounts receivable $15,000 Less: Allowance for Doubtful Accounts 1,000 14,000 Equipment 20,000 Less: Accumulated Depreciation 4,000 16,000 The partners agree that the net realizable value of the receivables is $13,000 and the fair market value of the equipment is $17,000. Indicate how the accounts should appear in the opening balance sheet of the partnership. Accounts receivable $ Less: Allowance for Doubtful Accounts Equipment 2) Snow Flake Company reports net income of $60,000. The income ratios are Snow 60% and Flake 40%. Indicate the division of net income to each partner, and prepare the entry to distribute the net income. 3) E12-5B R. Zimmerman (beginning capital, $50,000) and I. Desmond (beginning capital $80,000) are partners. During 2008, the
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Unformatted text preview: partnership earned net income of $75,000, and Zimmerman made drawings of $15,000 while Desmond made drawings of $20,000. (a) Assume the partnership income-sharing agreement calls for income to be divided 55% to Zimmerman and 45% to Desmond. Prepare the journal entry to record the allocation of net income. (b) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $30,000 to Zimmerman and $20,000 to Desmond, with the remainder divided 55% to Zimmerman and 45% to Desmond. Prepare the journal entry to record the allocation of net income. (c) Assume the partnership income-sharing agreement calls for income to be divided with a salary of $40,000 to Zimmerman and $30,000 to Desmond, interest of 10% on beginning capital, and the remainder divided 50% 50%. Prepare the journal entry to record the allocation of net income. (d) Compute the partners ending capital balances under the assumption in part (c)....
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