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

       Harper20,000   
       Cheves 20,000  
       Total    40,000
       Net income remaining for allocation   12,000
     
Third, remainder shared equally:    
       Harper ($12,000 × ⅓)4,000   
       Cheves ($12,000 × ⅓) 4,000  
       Calderon ($12,000 × ⅓)  4,000 
       Total     12,000
       Net income remaining for allocation   $         0
     
       Net income allocated to the partners$32,000$36,000$24,000$92,000
 
 
 
 
 
 

(10 min.) E12-8
 OscarElmoTotal
Total income (loss) to be allocated  $(11,000)
Allocation for service25,00015,000(40,000)
Net loss remaining for allocation  (51,000)
Interest on capital accounts5,0007,000(12,000)
Net loss remaining for allocation  (63,000)
Balance divided 5:4 ratio(35,000)(28,000)(63,000)
       Allocation of Loss – requires cash to be paid in$ (5,000)$ (6,000) 
 
Interest calculations:
Original investment is $50,000 + $70,000 = $120,000
So $12,000 is split as $5,000 and $7,000
 
Balance calculation:
$63,000 x 5/9 = $35,000
$63,000 x 4/9 = $28,000
 

 (5–10 min. if completed E12-6, otherwise 30 min.) E12-9
If did not complete E 12-6 then solve this first.
Partners’ shares of net income and net loss:
 Net Income (Net Loss)
 DanoloGoldmanTotal
a.   Half to each partner$ (62,400)$(62,400)$(124,800)
    
b.   Danolo ($96,000/$264,000 ´ $105,600)$  38,400  
       Goldman ($168,000/$264,000 ´ $105,600) $67,200$105,600
    
c.    Total net income  $264,000
       Sharing of first $132,000 based on capital
       balances:   
              Danolo ($96,000/$264,000 ´ $132,000)$  48,000  
              Goldman ($168,000/$264,000 ´ $132,000) $84,000  132,000
       Net income left for allocation    132,000
    
       Sharing based on service:   
              Danolo ($100,000 ´ 0.40)40,000  
              Goldman ($100,000 ´ 0.60)    60,000  100,000
       Net income left for allocation      32,000
       Balance shared equally:   
              Danolo ($32,000 ´ 0.5)16,000  
              Goldman ($32,000 ´ 0.5)    16,000    32,000
       Net income left for allocation  $           0
       Net income allocated to the partners$104,000$160,000$264,000
 
 

 (cont.) E12-9
General Journal
DateAccount Titles and ExplanationsPost. Ref.DebitCredit
Dec.31Income Summary 264,000 
       Ken Danolo, Capital  104,000
       Jim Goldman, Capital  160,000
      
 31Ken Danolo, Capital 148,000 
       Ken Danolo, Withdrawals  148,000
      
 31Jim Goldman, Capital 120,000 
       Jim Goldman, Withdrawals  120,000