ACCTG 102 Lecture Notes - Lecture 22: Capital Account

9 views2 pages

ochrehornet578

14 Sep 2020

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Methods of recording changes in membership of the partnership. Bonus method any difference between the assets invested and the credit to the new partners" capital account is adjusted to the capital accounts of the other partners. With a withdrawal the difference between the recorded value of the assets withdrawn and the debit to withdrawing partner account is adjusted to remaining partners" accounts. Difference between value implied by the amount of consideration negotiated and value on books. Bonus and goodwill method used for either admission of a new partner or the withdrawal of a partner. A partner is entitled to sell his/her interest in firm but other partners are not forced to accept the new member. All partners have to agree to let them manage, otherwise only right to receive profits and assets upon liquidation. If a sold of his interest, the payment goes directly to the partner who sold it.

Related Questions

After the tangible assets have been adjusted to current marketprices, the capital accounts of Brad Paulson and Drew Webster havebalances of $47,560 and $56,520, respectively. Austin Neel is to beadmitted to the partnership, contributing $28,150 cash to thepartnership, for which he is to receive an ownership equity of$32,900. All partners share equally in income. Required: A. OnDecember 31, journalize the entry to record the admission of Neel,who is to receive a bonus of $4,750. Refer to the Chart of Accountsfor exact wording of account titles. B. What are the capitalbalances of each partner after the admission of the new partner? C.Why are tangible assets adjusted to current market prices, prior toadmitting a new partner?

ceruleanreindeer230

All of the following statements regarding stock dividends are trueexcept:

Directors can use stock dividends to keep the market price of thestock affordable.

Stock dividends provide evidence of management's confidence thatthe company is doing well.

Stock dividends do not reduce assets or equity.

Stock dividends decrease the number of shares outstanding.

Stock dividends transfer a portion of equity from retained earningsto contributed capital.

A stock dividend:

Is not a liability on the balance sheet.

Does not reduce a corporation's assets and stockholders'equity.

Transfers a portion of equity from retained earnings to contributedcapital.

Does not affect total equity, but does affect the components ofequity.

All of these.

Prior period adjustments are reported in the:

Multiple-step income statement.

Balance sheet.

Statement of retained earnings.

Statement of cash flows.

Single-step income statement.

The withdrawals account of each partner is:

Closed to that partner's capital account with a credit.

Closed to that partner's capital account with a debit.

A permanent account that is not closed.

Credited with that partner's share of net income.

Debited with that partner's share of net loss.

A bonus may be paid:

	By a new partner when the current value of a partnership is greaterthan the recorded amounts of equity.
	By a withdrawing partner to remaining partners if the recordedvalue of the equity is overstated.
	To a new partner with exceptional talents.
	By remaining partners to a withdrawing partner if the recordedequity is understated.
	All of these.

periwinklecamel697

A partnership of attorneys in the St. Louis, Missouri, area hasthe following balance sheet accounts as of January 1, 2015: Assets$ 322,000 Liabilities $ 104,000 Athos, capital 86,000 Porthos,capital 76,000 Aramis, capital 56,000 According to the articles ofpartnership, Athos is to receive an allocation of 50 percent of allpartnership profits and losses while Porthos receives 30 percentand Aramis, 20 percent. The book value of each asset and liabilityshould be considered an accurate representation of fair value. Foreach of the following independent situations, prepare the journalentry or entries to be recorded by the partnership. (If no entry isrequired for a transaction/event, select "No journal entryrequired" in the first account field.)

All three of the present partners agree to sell 10 percent ofeach partnership interest to D'Artagnan for a total cash payment of$25,000. Each partner receives a negotiated portion of this amount.Goodwill is recorded as a result of the transaction.

D'Artagnan is allowed to become a partner with a 20 percentownership interest by contributing $60,000 in cash directly intothe business. The bonus method is used to record thisadmission.

D'Artagnan is allowed to become a partner with a 20 percentownership interest by contributing $60,000 in cash directly intothe business. The entrance into the partnership is recorded by thegoodwill method.

D'Artagnan is allowed to become a partner with a 10 percentownership interest by contributing $16,000 in cash directly to thebusiness. The goodwill method is used to record this transaction.(Round your answers to nearest whole dollarvalue.)

f.	Aramis decides to retire and leave the partnership. Anindependent appraisal of the business and its assets indicates acurrent fair value of $300,000. Goodwill is to be recorded. Aramiswill then be given the exact amount of cash that will close out hiscapital account.

crimsongrasshopper358

ACCTG 102 Lecture Notes - Lecture 22: Capital Account

Document Summary

Get access

Related Documents

ACCTG 102 Lecture Notes - Lecture 23: Intangible Asset

ACCTG 102 Lecture Notes - Lecture 20: Intangible Asset, Capital Account, Weighted Arithmetic Mean

ACCTG 102 Lecture Notes - Lecture 24: Equity Method, Retained Earnings, Income Statement

Related Questions