• March 19th, 2016


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Problem C-II- Division of Partnership Income- The capital account balance on January 1, 2017, for Christine and Dave were $140,000 and $210,000. During 2017, Christine and Dave partnership had sales of $520,000, cost of goods sold of $180,000, and operating expenses of $46,000. Prepare a schedule which clearly sets out the division of income or loss to the partners for 2017.1. Since Christine will work only part time in the partnership, she will be allocated a salary allowance that is one half the salary allowance allocated to Dave. Dave’s salary allowance will be 20% of sales. 2.Both partners will be given an interest allowance of 20% on their beginning of the year capital account balances. 3.The remaining income and loss is to be divided 40% to Christine and 60% to Dave. Problem C-III- Plant Asset Disposal Entries. Prepare journal entries to record the following transaction in 2017 for Dorsett Company. 1.May1 Exchanged old store equipment and $80,000 cash for new store equipment. The old store equipment originally cost $160,000, and had a book value of $100,000 on the date of exchange. The old store equipment had a fair market value of $144,000 on the date of exchange. Assume depreciation on the old equipment has already been recorded for the current year. The exchange had commercial substance. 2. July 31 Exchanged a delivery truck and $40,000 cash for a new delivery truck. The old delivery truck originally cost $46,000 and had accumalated depreciation of $31,000 on the date of exchange. The fair value of the old delivery truck on the date of exchange was $12,000. Assume the depreciation on the truck has already been recorded for the current year. The exchange ad commercial substance. 3. Aug.31 Equipment with a 5-year useful life was purchased on January 1,2014, for $84,000 and was sold for $30,000. The equipment had been depreciated using the straight line method with an estimated salvage value of $12,000. Depreciation expense was last recorded on December 31, 2016. Problem C-IV-Payrol Accounting- Jefferson Company has three employees whose monthly salaries ans accumulated year to date wages at September 30,2017 are as follows: Employee Ansell, Accumulated Wages 9/30/17 is $62,000, October Salary is $6,900. Comer Accumulated wages 91,000, October Salary $10,000, Francis A.W. $6,000 Oct. Sal. $800. The following payroll taxes are applicable: FICA tax on first $110,100 is 8%, FUTA tax on first $7,000 is 6.2%, SUTA tax on first $7,000 is 5.4%. The amount of federal income tax withholding for the October payroll is $900, $1,700, and $150 for Ansell, Comer, and Francis. Prepare the journal entries to record the October payroll and the employers payroll tax expense for the month of October. Problem C-V-Depreciation Method. The following information is available for Carnegie Company, which has an accounting year end on December 31, 2014. 1.A delivery truck was purchased on June 1, 2015, for $60,000. it was estimated to have a $4,800 salvage value after being driven 115,000 miles. Prior to 2017, the truck was driven 43,000 miles, and during 2017, the truck was driven 18,500 miles. the unit of activity method of depreciation is used. 2. A building was purchased on January 1, 2005, for $2,700,000. It is estimated to have a $60,000 salvage value at the end of its 30 year useful life. The straight line method of depreciation is bein used. 3. Equipment was purchased on January 1, 2015 for $140,000. It was estimated that the equipment would have a $16,000 salvage value at the end of its 4 year useful life. The double declining balance method of depreciation is being used. Prepare a table showing appropriate amounts. Assets for truck, Accumulated Depreciation 1/1/17 $ amount, Truck, depreciation expense for 2017 $ amount, truck-book value at 12/31/17 $ amount. Do the same for Building and Equipment. Same as above. Problem C-VI-Partnership Liquidation. The balance sheet of the Tri Brothers partnership just prior to liquidation appears below: Tri Brothers Balance Sheet december 31, 2017. Assets-Cash $140,000, Noncash assets $380,000. Liabilities and Owners Equity-Liabilities $240,000, Grayson, Capital 40,000, Lawson, Capital 160,000, Myer’s Capital 80,000. Both ending with $520,000. Other info.1.The partners Grayson, Lawson, and Myers share profits and losses in the ratio of 6:3:1. 2. The noncash assets are sold for $280,000. 3. The liabilities are paid in full.4. The remaining assets are distributed to the partners. Assume that if any partner any a capital deficiency, he will not be able to pay the amount owed to the partnership. Prepare the five entries to record the liquidation of the Tri Brothers partnership. Problem D-IV-Bonds Payable-Straight Line Method. Jozoi Company issues $700,000 of 10%, 10 year bonds on January 1, 2016, at 102. Interest is payable annually on January 1. the company uses the straight line method od amortization. 1. Journalize the entries on (1) January 1,2016, (2) December 31,2016, and (3) January 1,2017. 2. Show the balance sheet presentation of the bonds at December 31, 2016. Problem D-V-Income Statement and Retained earnings Statement. The following information is available for Wrina Corporation for the year ennded December 31,2016: Beginning retained earnings is $340,000, Cost of goods sold is 620,000, Declared cash dividends is 50,000, Operating expenses 170,000, Other expenses and losses- 40,000, Other revenues and gains-60,000, Sales revenue- 1,000,000, Tax rate is 30%. Prepare a corporate income statement in good form. 2. Prepair a retained earnings statement for the year. Problem D-VI- Compute Earnings per Share- MK Company has a simple capial structure. At December 31,2012, it had $500,000 of $100 par value 6% preferred stock outstanding, and $1,000,000 of $5 par value common stock outstanding. Net income for the year was $480,000. Compute the earnings per share of common stock assuming the dividend on preferred stock was not declared and the preferred stock is cumulative. the common shares remained unchanged during the year.

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