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Principles of Accounting, Volume 1: Financial Accounting

Exercise Set A

Principles of Accounting, Volume 1: Financial AccountingExercise Set A
EA 1.

LO 15.2On May 1, 2017, BJ and Paige formed a partnership. Each contributed assets with the following agreed-upon valuations.

BJ contributes Cash of $80,000 and Equipment of 50,000. Paige contributes Cash of $20,000, Equipment of 60,000, Building of 240,000, and Loan payable of 100,000.

Prepare a separate journal entry to record each partner’s contributions.

EA 2.

LO 15.3The partnership of Chase and Chloe shares profits and losses in a 70:30 ratio respectively after Chloe receives a $10,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is:

  1. $ 30,000
  2. $ 6,000
  3. ($10,000)
EA 3.

LO 15.4The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partner’s new agreement will share profit and loss in a 1:3 ratio.

EA 4.

LO 15.5Cheese Partners has decided to close the store. At the date of closing, Cheese Partners had the following account balances:

Capital $9,000; Cash $6,000; Inventory $15,000; Store fixtures $10,000; Accounts payable $22,000.

A competitor agrees to buy the inventory and store fixtures for $20,000. Prepare the journal entries detailing the liquidation, assuming that partners Colette and Swarma are sharing profits on a 50:50 basis:

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