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

 
Danolo’s capital balance decreased by $44,000 (withdrawals of $148,000 exceeded net income of $104,000). Goldman’s capital balance increased by $40,000 (net income of $160,000 exceeded withdrawals of $120,000). Overall, partnership capital decreased by $4,000 because net income of $264,000 fell short of partner withdrawals of $268,000 ($148,000 + $120,000).
 
 
 
(5–10 min.) E12–10
Equity of Goertz                                  $30,000
Neilson’s contribution                          17,000
Total equity                                         $47,000
Neilson’s equity interest                    ×  30%
Neilson’s equity after admission    $14,100
Neilson’s contribution = $17,000 – $14,100 = $2,900 bonus paid to Goertz.
 

(10–15 min.) E12-11
Req. 1
Partners’ equity in the partnership:
a.   Wang’s balance$  39,500
       Wird’s balance  79,000
       Bales’s balance           0
  
b.   Partnership capital before Wang is admitted ($79,000 + $39,500)$118,500
       Wang’s investment  39,500
       Partnership capital after Wang is admitted 158,000
  
       Wang’s capital in the partnership ($158,000 ´ 1/4)$  39,500
       Wird’s capital in the partnership79,000
       Bales’s capital in the partnership  39,500
       Total partnership capital$158,000
  
c.    Partnership capital before Wang is admitted ($79,000 + $39,500)$118,500
       Wang’s investment  71,500
       Partnership capital after Wang is admitted$190,000
  
       Wang’s capital in the partnership ($190,000 ´ 1/4)$  47,500
       Wird’s capital in the partnership $79,000 + [($71,500 – $47,500) ´ 1/2]91,000
       Bales’s capital in the partnership $39,500 + [($71,500 – $47,500) ´ 1/2]  51,500
       Total partnership capital$190,000
 
Req. 2
General Journal
DateAccount Titles and ExplanationsPost. Ref.DebitCredit
a. Mar.4Alan Bales, Capital 39,500 
       Joanna Wang, Capital  39,500
      
b. Mar.4Cash 39,500 
       Joanna Wang, Capital  39,500
      
c. Mar.4Cash 71,500 
       Joanna Wang, Capital  47,500
       Tanya Wird, Capital  12,000
       Alan Bales, Capital  12,000
Allocation = $24,000 × 1/2 = $12,000

(10–15 min.) E12-12
The profit-and-loss-sharing ratio is Harry 40 percent ($20,000 ÷ $50,000), Sunny 60 percent ($30,000 ÷ $50,000).
 
2.  $50,000
 
3.  Amin received a 20 percent interest. ($175,000 + $50,000 = $225,000; $45,000 ÷ $225,000 = 20 percent.)
 
4.  Harry and Sunny received bonuses. The bonus was $5,000 ($50,000 – $45,000 = $5,000). Harry’s share of the bonus was $2,000 (40% of $5,000) and Sunny’s share was $3,000 (60% of $5,000).
 
5.  Harry 10 percent ($8,000 ÷ $80,000), Sunny 70 percent ($56,000 ÷ $80,000), and Amin 20 percent ($16,000 ÷ $80,000).
 
 
 
(5–10 min.) E12-13
1.   Stihl’s owner’s equity before asset write-down$40,500
       Stihl’s share of asset write-down ($18,000 ´ 1/3)  6,000