X and Y have original investments of $50,000 and $100,000, respectively, in a pa
ID: 2548742 • Letter: X
Question
X and Y have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $27,000 and si 8.00 respectively, and the remainder divided equally. How much of the net income of $50,000 would be allocated to X? a) $23,000.00 b) $27,000.00 c) $25,000.00 d) $33,333.33 25) Bonds were issued on January 1 of the current year at a premium of $3,040. If the life of the bonds is 9.5 years, what is the amount of the current year's amortization and how would the Premium on Bonds Payable account be affected by the entry to record the amortization: a) $320; Premium on Bonds Payable account debited b) $3,040; Premium on Bonds Payable account credited c) $320; Premium on Bonds Payable account credited d) $3,040; Premium on Bonds Payable account debited 2 6) Bonds Payable has a balance of $800,000 and Discount on Bonds Payable has a debit balance of S9 .500. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption? a) $6,500 gain b) $6,500 loss c) $25,500 gain d) $25,500 loss 27) Bonds with a face value of $100,000 were purchased through a broker at 100 plus accrued interest of $1,200 and brokerage commission of $120. The amount to be debited to the investment account is: a) $100,000 b) $100,120 c) $101,320 d) $99,800 28) Brooks Corporation owns 40% of the common stock of the Fairmont Corp. as a long-term investment Company and exercises a significant influence over its operating and financing policies. The stock was purchased on January 1, of the current year, for a total cost of $150,000. At end of the current calendar, Fairmont reports net income of $60,000 and pays $50,000 in dividends to its common stockholders. As a result of these transactions, what's the ending balance in the "Investment December 31, of the current year on Brook's books? a) $150,000 b) $174,000 c) $154,000 d) $194,000 t in Fairmont Corp. Common Stock account at 200 shares of Logan Corp. common stock as an investment for $3,500 plus commission of $250 and transfer taxes of $75. What amount would Longspur debit to its investment account as the cost of Logan Corp. stock? a) $3,750 b) $3,575 c) $3,500 d) $3,825Explanation / Answer
24) Answer: Option b) $27,000.00
25) Answer: Option a) $320; Premium on Bonds Payable account debited
Current year's premium amortization = $3040/9.5 = $320
The premium on bonds payable account has a credit balance which on amortization is debited. Hence the premium on bonds payable will be debited with $320 as mentioned under option a).
26) Answer: Option d) $25,500 loss
The journal entry recorded will be as under:
27) Answer: Option b) $100,120
The investment account will be debited with the face value of bonds $100000 and the brokerage commission $120 = $100120. The accrued interest of $1200 will be debited to the interest receivable account.
Per Chegg guidelines, 4 parts have been answered.
X Y Total Interest (10%) 5000 10000 15000 Salary allowance 27000 18000 45000 Remaining income (1:1) -5000 -5000 -10000 Total $ 27000 23000 50000Related Questions
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