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

(5–10 min.) S12-9
Req. 1
There is no bonus to any partner, as shown here:
Partnership capital before Gray is admitted ($60,000 + $80,000)                     $140,000
Gray’s investment in the partnership.....................................................................................................     70,000
Partnership capital after Gray is admitted......................................................................................................... $210,000
Gray’s capital in the partnership—same as her investment;
   no bonus $210,000 × ⅓)................................................................................................................... $  70,000
 
Req. 2
General Journal
DateAccount Titles and ExplanationsPost. Ref.DebitCredit
Feb.1Cash 70,000 
       Joan Gray, Capital  70,000
  To admit Gray as a partner with a ⅓ interest in the business.   
 
 

(10 min.) S12-10
Partnership capital before Mo is admitted
     ($115,000 + $75,000)................................................................................. $190,000
Mo’s investment in the partnership.............................................................................    70,000
Partnership capital after Mo is admitted................................................................................. $260,000
Mo’s capital in the partnership ($260,000 × 0.20)....................................................................................... $  52,000
Bonus to Bo and Go ($70,000 – $52,000)................................................................................. $  18,000
 
General Journal
DateAccount Titles and ExplanationsPost. Ref.DebitCredit
      
May21Cash 70,000 
       Bo, Capital  10,800
       Go, Capital  7,200
       Mo, Capital  52,000
  To admit Mo as a partner with a 20% interest in the business. Bonus to the existing partners.
Bo: $10,800 = $18,000 × 60%
Go: $7,200 = $18,000 × 40%   
 
(5–10 min.) S12-11
Chapman can take assets of $75,000 which is the amount of Chapman’s capital balance in the business. The profit-and-loss-sharing ratio is not used because the business is distributing assets to an owner. The business is not dividing profits or losses among the partners.

(5–10 min.) S12-12
General Journal
 
Date 
Account Titles and Explanations 
Debit 
Credit
    
Aug.     31Sean, Capital40,000 
  Mohid, Capital 4,000
  Beth, Capital 6,000
  Cash 30,000
 To record withdrawal of Sean from the business. Mohid’s Capital is increased by $4,000 [($40,000 – $30,000) × 2/5] and Beth’s Capital is increased by $6,000 [($40,000– $30,000) × 3/5].  
 
 
 (10–15 min.) S12-13
General Journal
DateAccount Titles and ExplanationsPost. Ref.DebitCredit
a.Jul. 31Land 20,000 
       Simpson, Capital  5,000
       Locke, Capital  10,000
       Job, Capital  5,000
  To revalue the land from $50,000 to $70,000 and allocate the gain to the partners.   
      
b.Jul. 31Simpson, Capital 32,000 
       Cash  32,000
  To record withdrawal of Simpson from the Partnership ($27,000 + $5,000)   
 
Simpson & Job .........  $5,000 = ($20,000 × ¼)
Locke ......................  $10,000 = ($20,000 × ½)

 
 
(10 min.) S12-14
    Capital
 Cash +Noncash assets =LiabilitiesLauren
+ (60%)Andrews
+ (20%)Benroudi
+ (20%)
Balance before sale of assets$10,000$90,000$30,000$40,000$20,000$10,000
Sale of assets and sharing of loss*  80,000(90,000)______(6,000) (2,000)(2,000)
Balances90,000030,00034,00018,0008,000
Payment of liabilities(30,000)______(30,000)__________________