Horngren’s Accounting, Volume 2, 11th Canadian Edition by Tracie Miller-Nobles Solution manual

Total Liabilities = $110,000
Total Partners’ Equity = $470,000 + $590,000 = $1,060,000
 
Verify that A = L + E: $1,170,000 = $110,000 + $1,060,000
 
 (15 min.) S12-4
RJO ENTERPRISES
Balance Sheet
June 30, 2019
Assets Liabilities 
Cash$175,000Accounts payable$  30,000
Inventory105,000  
Land150,000Partners’ Equity 
  R. Reeves, capital150,000
  J. Bateman, capital175,000
  O. Morali, capital75,000
       Total partners’ equity$400,000
Total assets$430,000Total liabilities and equity$430,000
 (5–10 min.) S12-5
1.     Abel:         $4,000 × ½        =       $2,000
        Baker:        $4,000 × ½        =       $2,000
Remember: In the absence of a partnership agreement, profits and losses are shared equally.
2.  Abel: $40,000 + $15,000 + $10,000 – $20,000 = $45,000
        Baker: $10,000 + $50,000 = $60,000
Abel, Capital Baker, Capital
Loss 2,000  45,000 Loss 2,000  60,000
   Bal. 43,000    Bal. 58,000
 
(10 min.) S12-6
 FriesenWaltersOnleyTotal
Total net income   $94,000
     
a.   Sharing of first $40,000 of net income based on capital investments:    
       Friesen ([$12,000 / $24,000] × $40,000)$20,000   
       Walters ([$6,000 / $24,000] × $40,000) $10,000  
       Onley ([$6,000 / $24,000] × $40,000)  $10,000 
       Total   $40,000
       Net income remaining for allocation   $54,000
     
b.   Sharing of next $30,000 based on service:    
       Friesen ($30,000 × ½)15,000   
       Onley ($30,000 × ½)  15,000 
       Total    30,000
       Net income remaining for allocation   24,000
     
c.    Remainder shared equally:    
       Friesen ($24,000 × ⅓)8,000   
       Walters ($24,000 × ⅓) 8,000  
       Onley ($24,000 × ⅓)  8,000 
       Total    24,000
       Net income remaining for allocation   $         0
     
       Net income allocated to the partners$43,000$18,000$33,000$94,000
 (5–10 min.) S12-7
JE-HONG AND BARTON
Income Statement
For the Year Ended September 30, 2020
Service revenue $145,000
Total expenses     85,000
Net income $  60,000
Allocation of net income:  
       To Je-hong ($60,000 × 0.60)$ 36,000 
       To Barton ($60,000 × 0.40)   24,000$  60,000
 
 
Je-hong, Capital
  Balance30,000
Withdrawal.0Net income36,000
  Ending balance66,000

 
 
Barton, Capital
  Balance10,000
Withdrawal.0Net income24,000
  Ending balance34,000

 
 (5–10 min.) S12-8
General Journal 
DateAccount Titles and ExplanationsPost. Ref.DebitCredit 
Aug.       1Carlson, Capital 55,000 
      Reynaldo, Capital  55,000
 To admit Reynaldo as a partner.   








 
Carlson keeps the $120,000 difference between Reynaldo’s payment ($175,000) and Carlson’s capital balance ($55,000). This is a personal gain to Carlson.