CHAPTER 12

SOLUTIONS TO PROBLEMS: SET B

PROBLEM 12-1B

(a) Jan. 1 Cash .................................................................. 10,000

Accounts Receivable....................................................... 18,000
Inventory.......................................................................... 38,000
Equipment........................................................................ 35,000
Allowance for Doubtful
Accounts............................................................. 2,500
Notes Payable........................................................ 20,000
Accounts Payable.................................................. 30,000
Utech, Capital......................................................... 48,500

1 Cash .................................................................... 8,000

Accounts Receivable....................................................... 30,000
Inventory.......................................................................... 25,000
Equipment........................................................................ 18,000
Allowance for Doubtful
Accounts............................................................. 4,000
Accounts Payable.................................................. 40,000
Flott, Capital........................................................... 37,000

(b) Jan. 1 Cash .................................................................... 3,500

Utech, Capital......................................................... 3,500

1 Cash ....................................................................16,000
Flott, Capital........................................................... 16,000

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PROBLEM 12-1B (Continued)

(c) COMMANDER COMPANY

Balance Sheet
January 1, 2017

Assets
Current assets
Cash
($10,000 + $8,000 + $3,500 + $16,000)........................ $37,500
Accounts receivable
($18,000 + $30,000)...................................................... $48,000
Less: Allowance for doubtful accounts
($2,500 + $4,000).............................................. 6,500 41,500
Inventory
($38,000 + $25,000)...................................................... 63,000
Total current assets................................................. 142,000

Property, plant, and equipment

Equipment ($35,000 + $18,000)....................................... 53,000
Total assets ................................................................................ $195,000

Liabilities and Owners Equity

Current liabilities
Notes payable................................................................... $20,000
Accounts payable ($30,000 + $40,000)............................ 70,000
Total current liabilities.............................................. 90,000

Owners equity
Utech, capital ($48,500 + $3,500)..................................... $52,000
Flott, capital ($37,000 + $16,000)..................................... 53,000
Total owners equity................................................ 105,000
Total liabilities and owners equity............................................... $195,000

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 PROBLEM 12-2B

(a) (1) Income Summary....................................................................... 50,000

Riles, Capital ($50,000 X 50%)......................................... 25,000
Kinder, Capital ($50,000 X 30%)....................................... 15,000
Crifui, Capital ($50,000 X 20%)......................................... 10,000

(2) Income Summary....................................................................... 43,000

Riles, Capital
($15,000 + $6,000) ....................................................... 21,000
Kinder, Capital ($10,000 + $6,000)....................................... 16,000
Crifui, Capital ($0 + $6,000).............................................. 6,000

Net income................................................. $43,000

Salary allowances
Riles........................................................ (15,000 )
Kinder..................................................... (10,000)
Remainder.................................................. $18,000

To each partner
($18,000 X 1/3) ...................................... $6,000

(3) Income Summary....................................................................... 34,000

Riles, Capital
($4,000 + $20,000 + $2,000) ........................................ 26,000
Kinder, Capital ($2,500 + $2,000)..................................... 4,500
Crifui, Capital ($1,500 + $2,000)....................................... 3,500

Net income................................................. $ 34,000

Interest allowance
Riles
($40,000 X 10%)................................. (4,000)
Kinder ($25,000 X 10%)............................ (2,500)
Crifui ($15,000 X 10%)........................... (1,500)
Balance...................................................... 26,000
Salary allowance
Riles....................................................... (20,000)
Remainder................................................. $ 6,000
To each partner
($6,000 X 1/3) ........................................ $ 2,000

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PROBLEM 12-2B (Continued)

(b) DIVISION OF NET INCOME

Riles Kinder Crifui Total

NI to be distributed ( $34,000
Salary allowance.......................................... $20,000 $20,000
Income after salary Allowance $14,000
Interest allowance on capital
Riles 4,000 (
($40,000 X 10%)............................... ( $2,500
Kinder
($25,000 X 10%)............................... $1,500
Crifui
($15,000 X 10%)............................... 2,500 1,500 8,000
Income after salary and interest allowance $6,000
Riles
($6,000 X 1/3)...................................
Kinder 2,000
($6,000 X 1/3)...................................
Crifui 2,000
($6,000 X 1/3)...................................
Total remainder........................... 2,000
Total division of net income.......................... 6,000
$26,000 $4,500 $3,500 $34,000

(c) RKC COMPANY

Partners Capital Statement
For the Year Ended December 31, 2017

Riles Kinder Crifui Total

Capital, January 1............................. $40,000 $25,000 $15,000 $80,000
Add: Net income............................. 26,000 4,500 3,500 34,000
66,000 29,500 18,500 114,000
Less: Drawings................................ 15,000 10,000 5,000 30,000
Capital, December 31........................ $51,000 $19,500 $13,500 $84,000

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12-5

You are not responsible about part (a)

Copyright 2015 John Wiley & Sons, Inc.Weygandt, Accounting Principles, 12/e, Problems: Set B Solutions(For Instructor Use Ony)l

(a) NEWMAN COMPANY

Schedule of Cash Payments

PROBLEM 12-3B
Noncas Mallory, Bosco, Renteri
Item Cash + h = Liabilitie + Capital + Capital + a,
Assets s Capital
Balances before liquidation......... $30,00 + $70,000 = $52,500) + $28,000 + $13,65 $5,850)
Sale of noncash assets and 0) ) ) 0)
allocation of loss......... (1) + (2) + = + (3,000)
New balances............................... 55,00 + (70,000 = 52,500) + (7,500) + (4,500 2,850
Pay liabilities.......................... (3) 0) ) = (52,500) )
New balances............................... + 0 = 0) + 20,500) + 9,150 2,850)
Cash distribution to partners. (4) 85,000 ) = 0) ) + ) (2,850)
Final balances.............................. ) ) $ 0) 20,500) $ 0)
PROBLEM 12-3B (Continued)

(b) (1)
Apr. 30 Cash .................................................................55,000
Allowance for Doubtful Accounts................................... 2,000
Accumulated Depreciation............................................ 8,000
Loss on Realization....................................................... 15,000
Accounts Receivable........................................... 25,000
Inventory............................................................. 35,000
Equipment........................................................... 20,000

Noncash assets (net)........................... $70,000

Sale proceeds...................................... 55,000
Loss on sale of noncash
assets............................................... $15,000

(2)
30 Mallory, Capital ($15,000 X 50%).................................. 7,500
Bosco, Capital ($15,000 X 30%)................................... 4,500
Renteria, Capital ($15,000 X 20%)................................ 3,000
Loss on Realization............................................. 15,000

(3)
30 Notes Payable............................................................... 20,000
Accounts Payable......................................................... 30,000
Salaries and Wages Payable........................................ 2,500
Cash.................................................................... 52,500

(4)
30 Mallory, Capital ($28,000 $7,500).............................. 20,500
Bosco, Capital ($13,650 $4,500)................................ 9,150
Renteria, Capital ($5,850 $3,000).............................. 2,850
Cash.................................................................... 32,500

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PROBLEM 12-3B (Continued)

(c)
Cash Bosco, Capital
Bal. 30,000 4/30 (3) 52,500 4/30 (2) 4,500 Bal. 13,650
4/30 (1) 55,000 4/30 (4) 32,500 4/30 (4) 9,150
Bal. 0 Bal. 0

Mallory, Capital Renteria, Capital

4/30 (2) 7,500 Bal. 28,000 4/30 (2) 3,000 Bal. 5,850
4/30 (4) 20,500 4/30 (4) 2,850
Bal. 0 Bal. 0

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 *PROBLEM 12-4B

(a) (1) Giger, Capital............................................................................. 5,000

Edelman, Capital.............................................................. 5,000

(2) Beyer, Capital............................................................................ 8,000

Edelman, Capital.............................................................. 8,000

(3) Cash ..............................................................................29,000

Younger, Capital ($5,000 X 5/10)............................................... 2,500
Beyer, Capital ($5,000 X 3/10)................................................... 1,500
Giger, Capital ($5,000 X 2/10)................................................... 1,000
Edelman, Capital.............................................................. 34,000

Total capital of existing

partnership..................................... $56,000
Investment by Edelman..................... 29,000
Total capital of new
partnership..................................... $85,000

Edelman capital credit

($85,000 X 40%)............................ $34,000

Investment by new
partner, Edelman........................... $29,000
Edelman capital credit....................... 34,000
Bonus to new partner........................ $ 5,000

(4) Cash ..............................................................................24,000

Younger, Capital ($8,000 X 5/10)..................................... 4,000
Beyer, Capital ($8,000 X 3/10)......................................... 2,400
Giger, Capital ($8,000 X 2/10).......................................... 1,600
Edelman, Capital.............................................................. 16,000

Total capital of existing

partnership..................................... $56,000
Investment by Edelman..................... 24,000
Total capital of new
partnership..................................... $80,000

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*PROBLEM 12-4B (Continued)

Edelmans capital credit

($80,000 X 20%)............................... $16,000

Investment by new
partner, Edelman.............................. $24,000
Edelmans capital credit....................... 16,000
Bonus to old partners........................... $ 8,000

(b) You are not responsible about part (b)

Total capital after admission ($25,000 25%).............................................................. $100,000
Total capital before admission............................................................................. 56,000

(1) Cash investment by Edelman.................................................................... $44,000

Increase in Beyers equity ($25,000 $16,000)....................................... $ 9,000

Beyers income ratio................................................................................. 3/10

(2) Total bonus to old partners ($9,000 3/10)............................................... $ 30,000

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 *PROBLEM 12-5B

(a) (1) Piper, Capital............................................................................. 28,000

Dunlap, Capital................................................................ 14,000
Yevak, Capital.................................................................. 14,000

(2) Piper, Capital............................................................................. 28,000

Yevak, Capital.................................................................. 28,000

(3) Piper, Capital............................................................................. 28,000

Dunlap, Capital ($6,000 X 6/9).................................................. 4,000
Yevak, Capital ($6,000 X 3/9).................................................... 2,000
Cash................................................................................ 34,000

Pipers capital balance........................ $28,000

Payment to Piper................................. 34,000
Bonus to Piper..................................... $6,000

(4) Piper, Capital............................................................................. 28,000

Dunlap, Capital ($9,000 X 6/9)......................................... 6,000
Yevak, Capital ($9,000 X 3/9)........................................... 3,000
Cash................................................................................ 19,000

Pipers capital balance........................ $28,000

Payment to Piper................................. 19,000
Bonus to remaining
partners........................................... $ 9,000

(b) You are not responsible about part (b)

(1) Yevak capital after withdrawal.............................................................................. $57,000

Yevak capital before withdrawal................................................................. 51,000
Bonus to Yevak.......................................................................................... $6,000
Yevak income ratio with Dunlap................................................................. 3/9
Total bonus ($6,000 3/9)......................................................................... $18,000

(2) Piper capital balance.................................................................................. $28,000

Total bonus to remaining partners.............................................................. (18,000)
Cash paid to Piper..................................................................................... $10,000

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