Question

1.

Admitting New Partners Who Buy an Interest and Contribute Assets

The capital accounts of Trent Henry and Tim Chou have balances of $187,500 and $135,200, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $43,100 and one-fourth of Chou’s interest for $29,700. Clarke contributes $45,800 cash to the partnership, for which she is to receive an ownership equity of $45,800.

a1. Journalize the entry to record the admission of Gilbert. For a compound transaction, if an amount box does not require an entry, leave it blank.

a2. Journalize the entry to record the admission of Clarke.

b. What are the capital balances of each partner after the admission of the new partners?

Partner	Capital Balance
Trent Henry	$
Tim Chou	$
LeAnne Gilbert	$
Becky Clarke	$

2.

Admitting New Partner With Bonus

Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $41,000 and $53,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $25,000.

a. Determine the recipient and amount of the partner bonus.
$  

b. Provide the journal entry to admit Solano into the partnership. For a compound transaction, if an amount box does not require an entry, leave it blank.

c. Why would a bonus be paid in this situation?

Apparently, Jenkins and Tanner value   offered by Solano.

3.

1. Distribution of Cash Upon Liquidation

   Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $42,000 and $28,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $53,000.

   a. What is the amount of a gain or loss on realization?

   $

   b. How should the gain or loss be divided between Hewitt and Patel?

   Hewitt
   Patel

   c. How should the cash be divided between Hewitt and Patel? If an amount is zero, enter "0".

   Hewitt and Patel
   Distribution of Cash
   	Hewitt	Patel
   Capital balances before realization	$	$
   Division of gain or loss on realization
   Balances	$	$
   Cash distributed to partners
   Final balances	$	$

4.

Liquidating Partnerships—Capital Deficiency

Nettles, King, and Tanaka are partners sharing income 3:2:1. After the firm's loss from liquidation is distributed, the capital account balances were: Nettles, $42,000 Dr.; King, $159,000 Cr.; and Tanaka, $115,000 Cr.

If Nettles is personally bankrupt and unable to pay any of the $42,000, what will be the amount of cash received by King and Tanaka upon liquidation? If an amount is zero, enter in 0. Use the minus sign to indicate any deficiencies.

Amount of Cash Received
	Nettles	King	Tanaka
Capital balances after realization	$	$	$
Distribution of partner deficiency
Capital balances after deficiency distribution	$	$	$

5.

Statement of Partnership Liquidation

After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $45,000, $63,900, and $28,500, respectively. Cash, noncash assets, and liabilities total $66,600, $118,500, and $47,700, respectively. Between July 1 and July 29, the noncash assets are sold for $94,500, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1.

Prepare a statement of partnership liquidation for the period July 1-29. Enter any subtractions (balance deficiencies, payments, cash distributions, divisions of loss, sale of assets) as negative numbers using a minus sign. If an amount is zero, enter in "0".

Gold, Porter, and Sims
Statement of Partnership Liquidation
For the Period Ending July 1-29
	Cash +	Noncash Assets =	Liabilities +	Capital Gold (3/6) +	Capital Porter (2/6) +	Capital Sims (1/6)
Balances before realization	$	$	$	$	$	$
Sale of assets and division of loss	+
Balances after realization	$	$	$	$	$	$
Payment of liabilities
Balances after payment of liabilities	$	$	$	$	$	$
Cash distributed to partners
Final balances	$	$	$	$	$	$

Answer 1

1.