Cash 800,000 Adjusted Assets of Sarah

Accounts Receivable 2,112,000 Cash investment of Matteo

Merchandise Inventory 4,800,000 [4] Total Assets of the Partnership
Equipment 6,600,000
Prepaid Expenses 275,000 [5] Total Liab of the Partnership
Adjusted Assets of Sarah 14,587,000
Accounts Payable 3,000,000
Notes Payable 5,000,000
Accrued Expenses 125,000 8,125,000
[1] Adjusted Capital of Sarah 6,462,000
Sarah - interest 75%
Total Capital of Partnership 8,616,000
Matteo - interest 25%
[2] Cash investment of Matteo 2,154,000
Cash in the books of Sarah 800,000
[3] Total Cash of the Partnership 2,954,000
Assets of Sarah 14,587,000
stment of Matteo 2,154,000
ets of the Partnership 16,741,000

of the Partnership 8,125,000

 MAR182 MAR186
Cash 1,800,000 600,000 Interest
Accounts Receivable 1,900,000 1,140,000 Salaries
Merchandise Inventory 4,800,000 1,920,000 Bonus
Equipment 4,200,000 2,750,000 Remainder
Prepaid Expenses 460,000 200,000 Share in Net Income
Adjusted Assets 13,160,000 6,610,000
Net Income
Accounts Payable 6,000,000 3,780,000 Interest
Accrued Expenses 30,000 10,000 Salaries
Adjusted Liabilities 6,030,000 3,790,000 Basis of Bonus
Bonus %
Adjusted Capital 7,130,000 2,820,000 Bonus to MAR186
Comp. of Ave. Cap. 4/30 160,000 - 240,000
6/1 - 490,000 - 122,500 Summary of Answers:
8/31 200,000 160,000 1
10/1 37,500 75,000 2
Ave. Cap. 7,037,500 2,692,500 3
4
MAR182 MAR186 5
Beginning Capital 7,130,000 2,820,000 6
Inv/With 4/30 240,000 - 360,000 7
6/1 - 840,000 - 210,000 8
8/31 600,000 480,000 9
10/1 150,000 300,000 10
Share in Net Income 1,132,580 667,420
Ending Capital, adjusted 8,412,580 3,697,420
 70% 30%
MAR182 MAR186 Total
351,875 134,625 486,500
180,000 180,000 360,000
95,350 95,350
Remainder 600,705 257,445 858,150
Share in Net Income 1,132,580 667,420 1,800,000

Net Income 1,800,000

- 486,500
- 360,000
Basis of Bonus 953,500
10%
Bonus to MAR186 95,350

Summary of Answers:
MAR182 Capital Credit 7,130,000
MAR186 Capital Credit 2,820,000
Total Assets of the Partnership 19,770,000
Net adjustments - MAR186 - 780,000 debit (adjusted capital less unadjusted)
Average Capital MAR 182 7,037,500
Bonus to MAR186 95,350
Share of MAR182 1,132,580
Share of MAR186 667,420
Ending capital of MAR182 8,412,580
Ending capital of MAR186 3,697,420
 50% 50%
Evie Leo Total
Salaries 300,000 180,000 480,000
Interest 30,000 30,000 60,000
*Bonus -
Remainder - 132,500 - 132,500 - 265,000
Share in Net Income 197,500 77,500 275,000

*No bonus is given to Evie since amount NI after salaries and interest results to a negative amount.
tive amount.
 Ann Win
Beginning Capital 40,000 32,000
Additional Investment 40,000 30,000
Withdrawals - 10,000 - 2,000
Capital before Net Income 70,000 60,000 130,000
Basis of Allocating Remainder 7/13 6/13

Ann Win Total

Bonus (10% of NI) 6,000 6,000
Interest 4,000 3,200 7,200
Remainder 25,200 21,600 46,800
Share in Net Income 35,200 24,800 60,000

Capital before Net Income 70,000 60,000

Share in Net Income 35,200 24,800
Ending capital 105,200 84,800
 Marvin Jerwin Grace Total
Salaries 30,000 24,000 18,000 72,000 Beginning Capital
Interest 11,500 15,000 22,750 49,250 10/1 investment
Bonus 10,000 10,000 12/1 investment
Remainder 30,000 30,000 30,000 90,000 Average Capital
Share in NI 81,500 69,000 70,750 221,250

Equation 1 Equation 2 Beginning Capital

B = 10% (NI - S - I)
B = 10%(NI - 121,250)
B = 0.1NI - 12,125
0.1NI = B + 12,125
(0.1NI = B + 12,125) x 10
NI = 10B + 121,250
NI = S + I + B + R 10/1 investment
NI = B + 211,250 12/1 investment
Share in Net Income
Elimination: Ending Capital
Equation 1 NI = 10B + 121,250
Equation 2 (NI = B + 211,250)
0 = 9B - 90,000
9B = 90,000
B = 10,000
 Marvin Jerwin Grace
Beginning Capital 200,000 300,000 450,000
10/1 investment 30,000
12/1 investment 5,000
Average Capital 230,000 300,000 455,000

Marvin Jerwin Grace

Beginning Capital 200,000 300,000 450,000
10/1 investment 60,000
12/1 investment 30,000
Share in Net Income 81,500 69,000 70,750
Ending Capital 341,500 369,000 550,750
 Peter Charlie
Beginning Capital 240,000 480,000
Share in Profit 54,300 108,600
Withdrawal - 50,500 - 80,000
Ending Capital 243,800 508,600

Peter (1) Charlie (2) Total

1/4 interest 60,950 127,150 188,100
Excess 37,300 74,600 111,900
Cash received 98,250 201,750 300,000
Allowance - 9,000
Inventory (inc. in FV) 10,000
Equipment (inc. in FV) 20,000
Acrrued Expense - 8,000
Net Adjustments 13,000

Annie (6) Bethy (4) Total

Beginning Capital 266,000 216,000 482,000
Adjustments 7,800 5,200 13,000
Total 273,800 221,200 495,000
Old Partners' Interest 80%
Total Agreed Capital 618,750
Cathy's Interest 20%
Investment of Cathy 123,750
Annie (6) Bethy (4)
Capital before admission 273,800 221,200
Agreed Capital 309,375 185,625
Settlement - 35,575 35,575
Bethy will pay Annie 35,575.
Other Assets 534,400
AR - T 24,000
Cash 28,000
Total Assets 586,400
Loan - C - 9,600
Loan - A - 28,800
A, Capital - 118,800
T, Capital - 88,800
C, Capital - 78,000
Liabilities 262,400

Cash 28,000
Proceeds (70%) 374,080
Liabilities - 262,400
Liq. Exp. - 12,000
Cash distributed 127,680
 25% 25% 50%
Yeng Rachelle Sarah Total
Interest 50,000 75,000 100,000 225,000
Salaries 45,000 50,000 96,000 191,000
Bonus 233,200 233,200
Remainder 129,200 129,200 258,400 516,800
Share in NI 457,400 254,200 454,400 1,166,000

Reported Net Income 750,000

Add back: Salaries 191,000
Interest 225,000
Net Income to be Allocated 1,166,000
 AC CC Difference
Old (55) 118,250 100,000 18,250
New (45) 96,750 115,000 - 18,250
Total 215,000 215,000 -

Total Contributed by Old 115,000

Cash contributed by C - 55,000
Cash contributed by D - 10,000
Equipment contributed by D 50,000