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  • Partnership Operation - Assignment

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    Cathleen Tena
    8 views2 pages
    The document describes 5 scenarios for a partnership between partners Y and Z. In scenario 1, partners Y and Z have equal initial capital contributions. In scenario 2, additional capital is required and partner Y should contribute it because partner Z's capital is already higher. In scenario 3, the bonus method is used and partner Y receives a bonus while partner Z pays a bonus to balance the capital amounts. In scenario 4, a cash settlement outside the partnership records is used to settle the capital balance difference. In scenario 5, partner Y invests additional capital while partner Z withdraws capital to balance the amounts.

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    Partnership Operation_Assignment

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    The document describes 5 scenarios for a partnership between partners Y and Z. In scenario 1, partners Y and Z have equal initial capital contributions. In scenario 2, additional capital is required and partner Y should contribute it because partner Z's capital is already higher. In scenario 3, the bonus method is used and partner Y receives a bonus while partner Z pays a bonus to balance the capital amounts. In scenario 4, a cash settlement outside the partnership records is used to settle the capital balance difference. In scenario 5, partner Y invests additional capital while partner Z withdraws capital to balance the amounts.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    8 views2 pages

    Partnership Operation - Assignment

    Uploaded by

    Cathleen Tena
    The document describes 5 scenarios for a partnership between partners Y and Z. In scenario 1, partners Y and Z have equal initial capital contributions. In scenario 2, additional capital is required and partner Y should contribute it because partner Z's capital is already higher. In scenario 3, the bonus method is used and partner Y receives a bonus while partner Z pays a bonus to balance the capital amounts. In scenario 4, a cash settlement outside the partnership records is used to settle the capital balance difference. In scenario 5, partner Y invests additional capital while partner Z withdraws capital to balance the amounts.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Partnership Operation_Assignment_Tena

    Scenario 1: Equal to Capital Contributions


    Y Z Partnership
    Cash 400,000 400,000
    Accounts Receivable 200,000 200,000
    Land 1,000,000 1,000,000
    Equipment 150,000 150,000
    Total 600,000 1,150,000 1,750,000
    Mortgage Payable-Land (250,000) (250,000)
    Adjusted Capital Balances 600,000 900,000 1,500,000

    Scenario 2: Additional Contribution


    Y Z Partnership
    Cash 400,000 400,000
    Accounts Receivable 200,000 200,000
    Land 1,000,000 1,000,000
    Equipment 150,000 150,000
    Total 600,000 1,150,000 1,750,000
    Mortgage Payable-Land (250,000) (250,000)
    Adjusted Capital Balances 600,000 900,000 1,500,000

    Contributed Capital 600,000 900,000 1,500,000


    Agreed Capital 900,000 900,000 1,800,000
    Additional Contribution (300,000) - (300,000)

    Partner Y should make the aditional contribution because


    Partner Z's capital is higher.

    Scenario 3: Bonus Method


    Y Z Partnership
    Cash 400,000 400,000
    Accounts Receivable 200,000 200,000
    Land 1,000,000 1,000,000
    Equipment 150,000 150,000
    Total 600,000 1,150,000 1,750,000
    Mortgage Payable-Land (250,000) (250,000)
    Adjusted Capital Balances 600,000 900,000 1,500,000

    Contribute Capital 600,000 900,000 1,500,000


    Agreed Capital 750,000 750,000 1,500,000
    Bonus (150,000) 150,000 -
    Partnership Operation_Assignment_Tena

    Scenario 4: Cash Settlement


    Y Z Partnership
    Cash 400,000 400,000
    Accounts Receivable 200,000 200,000
    Land 1,000,000 1,000,000
    Equipment 150,000 150,000
    Total 600,000 1,150,000 1,750,000
    Mortgage Payable-Land (250,000) (250,000)
    Adjusted Capital Balances 600,000 900,000 1,500,000

    Contribute Capital 600,000 900,000 1,500,000


    Agreed Capital 750,000 750,000 1,500,000
    Cash settlement (150,000) 150,000 -
    (payment) received

    In settlement, the cash payment is done outside the partnership's records.

    Scenario 5: Additional Investments (Withdrawal)


    Y Z Partnership
    Cash 400,000 400,000
    Accounts Receivable 200,000 200,000
    Land 1,000,000 1,000,000
    Equipment 150,000 150,000
    Total 600,000 1,150,000 1,750,000
    Mortgage Payable-Land (250,000) (250,000)
    Adjusted Capital Balances 600,000 900,000 1,500,000

    Contribute Capital 600,000 900,000 1,500,000


    Agreed Capital 750,000 750,000 1,500,000
    Additional Investments (150,000) 150,000 -
    (Withdrawal)

    Partner Y shall invest an additional P150,000, while


    Partner Z shall withdraw P150,000.

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