Scribd Logo
Upload

Welcome to Scribd!

  • OLPROFE01

    Uploaded by

    Red Mariee
    3 views1 page
    Partner A and B each own 60% and 40% of the partnership respectively. The partnership has total assets of $710,000 consisting of cash, accounts receivable, inventory, and buildings, with total liabilities of $110,000. Partner A's capital account is $330,000 but based on their 60% ownership, their minimum required capital is $405,000, so Partner A needs to contribute an additional $75,000 in cash to the partnership.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Partner A and B each own 60% and 40% of the partnership respectively. The partnership has total assets of $710,000 consisting of cash, accounts receivable, inventory, and buildings, with total liabilities of $110,000. Partner A's capital account is $330,000 but based on their 60% ownership, their minimum required capital is $405,000, so Partner A needs to contribute an additional $75,000 in cash to the partnership.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    3 views1 page

    OLPROFE01

    Uploaded by

    Red Mariee
    Partner A and B each own 60% and 40% of the partnership respectively. The partnership has total assets of $710,000 consisting of cash, accounts receivable, inventory, and buildings, with total liabilities of $110,000. Partner A's capital account is $330,000 but based on their 60% ownership, their minimum required capital is $405,000, so Partner A needs to contribute an additional $75,000 in cash to the partnership.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    OLPROFE01 - Activity 1

    a. Compute for the adjusted balance in the partner’s capital counts


    A B Partnership
    Cash 200,000 - 200,000
    Accounts Receivable 60,000 - 60,000
    Inventory 160,000 - 160,000
    Building(240k-50k)
    Total 420,000 290,000 710,000

    Notes Payable Net 90,000 90,000


    (120K- 30K)
    Mortgage Payable- 20,000 20,000
    land
    A. Capital 330,000 330,000
    B. Capital 270,000 270,000
    Total 420,000 290,000 710,000

    b. Assume that a partner’s capital shall be increased accordingly by contributing additional


    cash to bring the partner’s capital balance proportionate to their profit or loss ratio.
    Which partner should provide additional cash and how much is the additional cash
    contribution?
    A’s Capital 330,000
    Divided by: Profit(loss) sharing ratio of A 60%
    Total 550,000
    Multiply by: B’s Profit loss sharing ratio of B 40%
    Minimum capital requirement of B 220,000
    B’s Capital 270,000
    Deficiency on B’s Contribution -

    B’s Capital 270,000


    Divided by: Profit(loss) sharing ratio OF A 40%
    Total 675,000
    Multiply by: A’s Profit loss sharing ratio 60%
    Minimum capital requirement of A 405,000
    A’s Capital 330,000
    Deficiency on A’s Contribution 75,000

    You might also like