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

Req. 3
Barclay is correct in a strict legal sense. The omitted revenue is an element of profit, which the partners share in the 2:1 profit-and-loss-sharing ratio. From a practical standpoint, the sharing of the revenue may be debatable. If Resultan’s efforts clearly earned the revenue, she may be able to convince Barclay to alter the profit-and-loss-sharing ratio. If Barclay will not budge, she may lose Resultan as a partner.
Req. 4
An expense is like a loss, which the partners share based on their profit-and-loss-sharing ratio, not based on capital balances.

Financial Statement Case
(10–15 min.) FSC12-1
Req. 1
 20202016
Revenues (Thousands)AmountPercentageAmountPercentage
Assurance  $1,234        41%        $1,07054%
Consulting  1,007        34                34918
Tax    743          25                55728
Total revenues$2,984100%$1,976100%
Consulting services grew the most from 2016 to 2020.
Req. 2
Total revenues                            ................................................................................ $2,984,000
Average number of partners                               ÷             9
Average revenue per partner                               331,556
Number of hours worked per year                               ÷      1,900
Average amount charged by a partner
for one hour of his/her time                               $      174.5
Req. 3
Income to partners                            ....................................................... $1,057,000
Average number of partners                               ÷              9
Average net income per partner                               $   117,444