1) Rice, Hepburn, and DiMacro formed a partnership with Rice contributing $60,00
ID: 2441738 • Letter: 1
Question
1) Rice, Hepburn, and DiMacro formed a partnership with Rice contributing $60,000, Hepburn contributing $50,000 and DiMacro contributing $40,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. If the partnership had income of $75,000 for its first year of operation, what amount of income (rounded to the nearest dollar) would be credited to DiMarco's captial account?a. $20,000
b. $25,000
c. $30,000
d. $40,000
e. $75,000
2) Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000, respectively. Their partnership agreement calls for Shelby to receive a $60,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $135,000, then Shelby and Mortonson's respective shares are:
a. $67,500; $67,500
b. $92,500; $42,500
c. $57,857; $77,143
d. $90,000; $40,000
e. $35,000; $100,000
3) Nguyen invested $100,000 and Hansen invested $200,000 in a partnership. They agreed to share incomes and losses by allowing a $60,000 pery year salary allowance to Nguyen and a 40,000 per year salary allowance to Hansen, plus an interest allowance on the partners' beginning-year capital investments at 10%, with the balance to be shared equally. Under this agreement, the shares of the partners when the partnership earns $105,000 in income are:
a. $52,500 to Nguyen; 452,500 to Hansen
b. $35,000 to Nguyen; $70,000 to Hansen
c. $57,000 to Nguyen; $47,500 to Hansen
d. $42,500 to Nguyen; $62,500 to Hansen
e. $70,000 to Nguyen; $60,000 to Hansen
4)The partnership agree,ent for Smith Wesson & Davis, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Smith contributed $100,000, Wesson contributed $60,000 and Davis contributed $20,000. In the partnership's first year of operation, it incurred a loss of $210,000. what amount of the partnership's loss, rounded to the nearest dollar, should be absorbed by smith?
a. $70,000
b. $116,667
c. $23,333
d. $105,000
e. $52,500
5) Regina Harrison is a partner in Pressed for Time. An analysis of Regina Harrison's capital account indicates that during the most recent year, she withdrew $20,000 from the partnership. Her share of the partnership's net loss was $16,000 and she made an additional equtiy contribution of $10,000. Her capital account ended the year at $150,000. What was her capital balance at the beginning of the year?
a. $124,000
b. $144,000
c. $192,000
d. $176,000
e. 4134,000
6) The following information is available on Stewart Enterprises, a partnership, for the most recent fiscal year:
Total partnership capital at beginning of the year...$180,000
Partnership net income for the year...$150,000
Withdrawals by partners during the year...$120,000
Additional investments by partners during the year...$60,000
There are three partners in Stewart Enterprises: Stewart, Tedder and Armstrong. At the end of the year, the partners' capital accounts were in the ratio of 2:1:2, respecitvely. Compute the endeding capital balances of the three partners.
a. Stewart=$108,000; Tedder=$54,000; Armstrong=$108,000
b. Stewart=$90,000; Tedder=$90,000; Armstrong=$90,000
c. Stewart=$204,000; Tedder=102,000; Armstrong=$204,000
d. Stewart=$84,000; Tedder=$102,000; Armstrong=$84,000
e. Stewart=$60,000; Tedder=$30,000; Armstrong=$60,000
Explanation / Answer
1) Capital Investment ratio
= Rice $60,000 : Hepburn $50,000 : DiMacro $40,000
= 6:5:4
what amount of income (rounded to the nearest dollar) would be credited to DiMarco's captial account
= $75,000 x 4/15 = $20,000
2) b. $92,500; $42,500
Net Income $135,000
Less: Salary to Shelby -$60,000
Less: Interest on Capital
----------------------
Shelby $300,000 x 10% -$30,000
Mortonson $400,000 x 10% -$40,000
Distributable Profit $5,000
===========
Shelby 1/2 of $5,000 $2,500
Mortonson 1/2 of $5,000 $2,500
Shelby Total share
= $60,000 + $30,000 + $2,500 = $92,500
Mortonson Total Share
= $40,000 + $2,500 = $42,500
3)
Net Income $105,000
Less: Salary to Nguyen -$60,000
Salary to Hansen -$40,000
Less: Interest on Capital
----------------------
Nguuen $100,000 x 10% -$10,000
Hansen $200,000 x 10% -$20,000
Distributable Loss -$25,000
===========
Nguyen 1/2 of $25,000 $12,500
Mortonson 1/2 of $25,000 $12,500
Nguyen Total share
= $60,000 + $10,000 - $12,500 = $57,500
Hansen Total Share
= $40,000 + $20,000 - $12,500 = $47,500
4) Capital Investment Ratio
= Smith $100,000 : Wenson $60,000 : Davis $20,000
= 10 : 6 : 2
Smith share of loss = $210,000 x 10 / 18 = $116,667
5) Ending Capital Balance $150,000
Add ; Withdrawls $20,000
Add : Share of loss $16,000
Less: Equity Contributio -$10,000
Begining Capital Balance $176,000
=========
6) Beginning Capital Balance of the Partners $180,000
Add : Total Net Income of the firm $150,000
Less; Total Withdrwals -$120,000
Add : Total Additional Investment +$60,000
Total Ending Capital Balance $270,000
==========
Stewart Share = $270,000 x 2/5 = $108,000
Tedder Share = $270,000 x 1/5 = $54,000
Armstrong Share = $270,000 x 2/5 = $108,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.