SELECT COLLEGE

ACCOUNTING & FINANCE DEPARTMENT

PRINCIPLES OF ACCOUNTING - II
ASSIGNMENT (20%)
1. On May 1, 2021, ABEBE and KEBEDE formed a partnership. Each contributed assets
with the following agreed-upon valuations.
ABEBE KEBEDE
CASH 80,000 20,000
EQUIPMENT 50,000 60,000
BUILDING 0 240,000
LOAN PAYABLE 0 100,000

REQUIRED: Prepare a separate journal entry to record each partner’s contributions.

2. The partnership of ASTER and ALMAZ shares profits and losses in 70:30 ratios
respectively after ASTER receives a $10,000 salary. Prepare a schedule showing how the
profit and loss should be divided, assuming the profit or loss for the year is:

A. $ 30,000
B. $ 6,000
C. ($10,000)

3. The partnership of TOYIBA and AHMED shares profits and losses in a 50:50 ratio, and
the partners have capital balances of $45,000 each. Prepare a schedule showing how the
bonus should be divided if MUSA joins the partnership with a $60,000 investment. The
partner’s new agreement will share profit and loss in a 1:3 ratio.
4. MM Partners has decided to close the store. At the date of closing, MM Partners had the
following account balances:

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 A competitor agrees to buy the inventory and store fixtures for $20,000. Prepare the journal
entries detailing the liquidation, assuming that partners MELAKU and MELKAMU are
sharing profits on a 50:50 basis:

5. The partnership of KASSAHUN, SEMIRA, and ABEBECH has done well. The three
partners have shared profits and losses in a 1:3 ratio, with capital balances of $60,000 each.
ABEBECH wants to retire and withdraw. Prepare a schedule showing how the cost should
be divided if KASSAHUN and SEMIRA decide to pay ABEBECH $70,000 for the
retirement of her capital account and the new agreement will share profits and losses 50:50.
6. ARON Enterprise is a private consulting business recently organized. it has five employees
whose salaries are paid according to the Ethiopian calendar month. The following data
relates to the month of December, 2021.

Additional Information:

 The management of the enterprise usually expects a worker to work 48 hours in a

week and during December there are four weeks.
 There were no absentees during the month.
 All employees are permanent.
 Abdi agreed to contribute monthly Br. 700 from his salary as a monthly saving in the
credit association of the enterprise.

Required:

1. Compute the following for each employee.

A. Gross earning
B. Taxable income
C. Tax to be paid
D. Pension contribution
E. Total deduction

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 F. Net pay
2. Record the payment of salary as of December 31, 2021
3. Record the payment of the claim to the credit association of their enterprise on
January 1, 2022.
4. Record the payment of the withholding taxes and pension contribution to the
concerned government body on January 5, 2022.
5. Prepare the payroll register as of December 31, 2021.

Assessment
• Group Assignment 20%
Instructions
• Form a group of 5 students and solve the above problems
• Papers must be neatly written (are to be typed, if possible)
• Papers should be error-free
Deadline
• The last date for submitting a print-out of the above problem is ON FINAL EXAM
DATE
• Assignments that do not meet deadlines will bear penalties and shall not be
considered

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