cash 400,000 liabilities 80,000 other assets 800,000 f capital 280,000 ---------
ID: 2600186 • Letter: C
Question
cash 400,000 liabilities 80,000
other assets 800,000 f capital 280,000
--------------- a capital 460,000
s capital 380,000
Total assets 1,200,000 Total liabilities and capital 1,200,000
x and y share profits and losses in the ratio 30:20:50 Each of the following questions is independent of the others.
1. refer to the above infomation. assume that partner s retires form the partnership and receives 420,000 for her capital interest what is A's capital after s retires if the retiring partners goodwill is recognized by the partnership?
a. 456,000
b.480,000
c.404,000
d.460,000
2. refer to the above information. assume parter s retires from the partnership by selling her interest directly to A for 420,000 what are the captal balances of F and A after the withdrawal by S?
F A
a. 296,000 840,000
b. 280,000 880,000
c. 296,000 880,000
d. 280,000 840,000
3. on 7/1/14 petry co leased equipment to Dish Co for 10 years ( the useful life of the asset) Ptery had purchased the equipmentr for 5,200,000. Annual payments for 828,000 begin on 7/1/14. assume that the present value of these payments at 8% is 6,000,000. if this is the sales type lease, what amount of profit should Petry record for year ended 12/31/14?
a. 0
b. 800,000
c. 1,200,000
d. 1,080,000
4. from the point of view of the lessor, leases cannot be qualified as:
a. Sales-type without profit
b. Sales- type with profit
c. Finance
d. Operating
Explanation / Answer
Q1) Partner F,Partner A and Partner S share profit & loss in the ratio of 30:20:50 Partners' Capital F 280000 A 460000 S 380000 Partner S retire from Partnership and receive $420000 for capital interest. Excess of Capital afte retirement=Goodwill=($420000-$380000)=$40000 Total goodwill of a firm=($40000*(100/50)=(40000*100/50) Total goodwill of a firm= $ 80,000.00 A's Capital after S retires= $ 460,000.00 In case after retirement goodwill is recognized by partnership existing partner's capital account would not be changed. q2) If S selling his share directly to A Ans (d) Capital of F=$280000 Capital of A=$460000+380000= 840000 Ans 3) In Case of sale type lease profit should petry records Present Value of Payment 6000000 Purchased cost of equipment 5200000 Ans (b) Profit= $ 800,000.00 Profit in case of sale type of lease=Difference between Present value -Purchase cost Ans4) From the point of viwe of lessor ,leases cannot be qualified as Ans A) Sales Type without profit In sale type of lease the lessor always record operating profit so Sale type without profit cannot be possible.
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