Questions and Answers of Accounting Principles Volume 2

On November 15 of the current year, the account balances in Greenscape Partnership were Cash $8,000; Land $17,000; D. Dupuis, Capital $12,000; V. Dueck, Capital $10,000; and B. Veitch, Capital
Data for the Baylee Company partnership are presented in E12.16. Instructions Prepare the entries to record: a. The sale of the equipment. b. The allocation to the partners of the
At December 31, Baylee Company has cash of $40,000, equipment of $130,000, accumulated depreciation of $40,000, accounts payable of $55,000, and the following partners’ capital balances: H. Bayer
On February 14, 2023, Isabelle Moretti, Aida Kam, and Channade Fenandoe start a partnership to operate a marketing consulting practice. They sign a partnership agreement to split profits in a 2:3:4
After liquidating noncash assets and paying creditors, account balances in the Mann partnership are Cash $21,000; A, Capital (Cr.) $8,000; B, Capital (Cr.) $9,000; and C, Capital (Cr.) $4,000. The
On December 31, 2024, capital balances of the partners in Shelby Charters are C. Murphy $45,000; M. Knight $35,000; and T. Shelby $25,000. The partners share profit in a 5:3:2 ratio, respectively.
On March 2, 2023, Zoe Moreau, Karen Krneta, and Veronica Visentin start a partnership to operate a personal coaching and lifestyle consulting practice for professional women. Zoe will focus on
Wong, Hong, and Pai decided to liquidate their partnership on October 1. After the noncash assets were sold and the liabilities paid, the capital account balances were Wong, $87,400; Hong, $34,500;
On December 31, 2024, capital balances of the partners in Manitoba Maple are R. Buttar $45,000; S. Gosal $35,000; and T. Morden $25,000. The partners share profit in a 5:3:2 ratio, respectively.
Fung, Amlani, and Ironside are partners who share profits and losses 50%, 30%, and 20%, respectively. Their capital balances are $100,000, $60,000, and $50,000,
In Eastwood partnership, capital balances are Irey $40,000 and Pedigo $50,000. The partners share income equally. Vernon is admitted to the firm with a 45% interest by an investment of cash of
The partners in Game Tech Partnership decided to liquidate the partnership on June 30, 2024, when the balances in the partnership’s accounts were as follows: The partners share profit and loss
R. Minoa decides to invest $25,000 in a partnership for a one-sixth capital interest. Will Minoa’s capital balance be $25,000? Does Minoa also acquire a one-sixth profit and loss ratio through this
Dale Nagel, Keith White, and Issa Mbango have capital balances of $92,000, $74,000, and $6,000, respectively. They share profit or loss on a 5:3:2 basis. White withdraws from the partnership on
The partners in Omni Services decided to liquidate the partnership on May 31, 2024, when balances in the company’s accounts were as follows: The partners share profit and loss 5:3:2 for Hally,
The three partners of Hawkdale Contractors agree to liquidate their partnership on August 8, 2024. At that point, the accounting records show the following balances:Cash
In ABC Co., the capital balances of the partners are A. Ali $30,000; S. Babson $25,000; and K. Carter $36,000. The partners share profit equally. On June 9 of the current year, D. Dutton is admitted
The three partners of Summer Springs Medical Clinic agree to liquidate their partnership on September 15, 2024. At that point, the accounting records show the following balancesCash
Julie Lane, Sara Miles, and Amber Noll have capital balances of $50,000, $40,000, and $30,000, respectively. The profit and loss ratio is 4:4:2. Assume Noll withdraws from the partnership on December
The medical practice of Dr. W. Jarratt and Dr. M. Bains had the following general ledger account balances at April 30, 2024, its fiscal year end:Accounts payable
The equity section of a partnership’s balance sheet shows the total amount invested by the partners separate from the profit recognized to date and retained in the business. Do you agree or
P Olive Oil Imports is a partnership owned by Magda Stavros and Giannis Metaxas. The partners share profit on a 3:2 basis, respectively. On January 1, 2024, they have capital balances of $100,000 and
Lambert Company had a $15,300 loss for the year ended October 31, 2024. The company is a partnership owned by Lilia and Terry Lambert. Salary allowances for the partners are Lilia $24,900 and Terry
Ajax Architects is a partnership with three partners. On January 31, 2024, the three partners, Tova Radzik, Sela Kopel, and Etti Falkenberg, have capital balances of $98,000, $79,000, and $47,000,
A. Veveris and J. Rubin share profit on a 2:1 basis, respectively. They have capital balances of $55,000 and $35,000, respectively, when S. Weiss is admitted to the partnership on September 1,
On December 31, the capital balances and profit and loss ratios in VKD Company are as follows: Instructions Journalize the withdrawal of Dixon under each of the following independent
The MillStone Partnership reported profit of $60,000 for the year ended February 29, 2024. Salary allowances are $45,000 for H. Mills and $25,000 for S. Stone. Interest allowances of 5% are
At April 30 of the current year, partners’ capital balances and the profit- and loss sharing ratio in SOS Enterprises are as follows:On May 1, SOSO Company is formed by admitting N. Osvald to the
Dr. J. Kovak and Dr. S. Donovan have been operating a dental practice as a partnership for several years. The fixed profit and loss ratio is 60% for Dr. Kovak and 40% for Dr. Donovan. The dental
MET Co. reports profit of $70,000 for the current year. Partner salary allowances are J. Miao $24,000; T. Qi $30,000; and M. Cheung $5,000. The profit and loss ratio is 5:3:2. Calculate the division
Copperfield Developments is a partnership owned by Alvaro Rodriguez and Elisabetta O’Grady. On December 31, 2023, the partners’ capital balances are Rodriguez $67,140 and O’Grady $78,140.
Caitlin Maguire and Fiona Whelan, two college friends, decided to set up a house-cleaning business called Maguire & Whelan Cleaning Services. On January 1, 2024, they put their resources
At April 30, partners’ capital balances in DES Partners are Dexter $44,000, Emley $26,000, and Singh $24,000. The profit-sharing ratio is 5:3:2, respectively. On May 1, DESW Partners is formed by
During the fiscal year ended November 30, 2024, the profit for Singh & Woods Partnership was $84,000. The partners, A. Singh and D. Woods, share profit and loss in a 3:5 ratio,
Daisey Sinclair and Jim Leigh began a partnership on February 1, 2024, by investing $70,000 and $95,000, respectively. They agree to share profit and losses by allocating yearly salary allowances of
Daisy and Rose Partnership reports profit of $75,000 for the year ended December 31, 2024. Daisy and Rose agree to a profit and loss ratio of 60% for Daisy and 40% for Rose. Determine the division of
P Below is an alphabetical listing of the accounts in the general ledger of Clay and Ogletree, LLP, at the partnership’s fiscal year end, , September 30, 2024. Adjusting entries for the year have
R. Huma and W. How have capital balances on July 1, 2023, of $65,000 and $50,000, respectively. The partnership profit-sharing agreement specifies: 1. salary allowances of $32,000 for Huma and
Rod and Dall are partners in R&D LLP. The partnership reports profit of $75,000. There is no partnership agreement. (a) Prepare the entry to distribute the profit between the
At the end of its first year of operations, on December 31, 2024, CRW Partners’ accounts show the following:The capital balance represents each partner’s initial capital investment. No closing
You are an expert in forming partnerships. Dr. Diljot Cheema and Dr. Sheila Unger want to establish a partnership to practice medicine. They will meet with you to discuss their plans. However, you
K. Ison (beginning capital, $50,000) and I. McCoy (beginning capital $80,000) are partners. During 2024, the partnership reported profit of $80,000, and Ison made drawings of $18,000 while McCoy
At the end of its first year of operations, on December 31, 2024, LBG Company’s accounts show the following: The capital balance represents each partner’s initial capital investment on
Veda Storey and Gordon Rogers have a partnership agreement with the following provisions for sharing profit or loss: 1. A salary allowance of $30,900 to Storey and $39,700 to Rogers 2. An
Terry Lam and Chris Tan have a partnership agreement with the following provisions for sharing profit or loss: 1. A salary allowance of $20,000 to Lam and $30,000 to Tan 2. An interest
(a) For accounting purposes, when a partner invests assets in a partnership, how is the value of these assets determined? (b) Is this practice consistent with the cost principle? Explain.
R. Black and B. Rivers decide to organize the Black Rivers Partnership. Black contributes $10,000 cash. Rivers contributes $2,400 of accounts receivable, of which the partners agree that $2,000 is
Aritzia Inc. is a retail company that designs and retails women’s fashions and accessories. Its first store was opened in 1984 in Vancouver by its founder, Brian Hill. Since then, it has expanded
K. Nasser and T. Yoko are considering a business venture. They ask you to explain the advantages and disadvantages of the partnership form of organization. Explain these to Nasser and Yoko.
The trial balances of two proprietorships on January 1, 2024, follow:Domic and Dasilva decide to form a partnership on January 1 and agree on the following valuations for the noncash assets that they
K. Decker, S. Rosen, and E. Toso are forming a partnership. Decker is investing $50,000 of personal cash to the partnership. Rosen owns land with a fair value of $15,000 and a small building with a
The trial balances of two proprietorships on January 1 of the current year: Visanji and Vanbakel decide to form the Varsity partnership and agree on the following fair values for the noncash
On January 1, 2024, the capital balances in Gablesmith Partnership are as follows: Zoya Gable............................................................. $20,000 Matthew Smith
The characteristics of a partnership include the following: (a) Association of individuals, (b) Limited life, and (c) Co-ownership of property. Explain each of these terms.
Presented below are three independent situations: 1. Angelique Gloss and David Deutsch, two students looking for summer employment, decide to open a home meal replacement business. Each day,
The following terms were introduced in this chapter: 1. Profit and loss ratio 2. Admission by investment3. Partnership liquidation 4. Mutual agency 5. Salary allowance 6.
(a) Explain the going concern assumption. (b) How does the going concern assumption support the use of the cost basis of accounting and the classification of assets and liabilities as current
Compare and contrast the accounting treatment for multiple-performance obligations under IFRS and multiple-element arrangements under ASPE.
Here are some of the accounting concepts relating to the conceptual framework discussed in this chapter: 1. Going concern assumption 2. Reporting entity 3. Full disclosure 4.
On March 24, 2024, Greenthumb Landscaping Services received $10,000 for five months of landscaping service to be provided from May through September 2024. Greenthumb’s year end is April 30 and the
For each of the following independent situations, indicate whether or not the cost constraint should be applied. (Write “Yes” or “No” beside each situation.) a. ______ The manager of a
On January 16, 2024, JRT Company enters into a contract with Beowulf Industries to deliver office furniture. JRT manufactures the products and ships them to Beowulf on March 31, 2024. Beowulf takes
For each of the following situations, indicate if the going concern assumption has been violated. (Write “Yes” or “No” beside each item.)a. ______ A company that is going to continue to
What are the criteria that must be met for revenue to be recognized from the sale of goods using the earnings approach?
Several reporting situations follow: 1. Tercek Company recognizes revenue during the production cycle. The price of the product and how many items will be sold are not certain. 2. In
Here are some concepts related to the conceptual framework discussed in this chapter: 1. Going concern assumption 2. Reporting entity concept3. Completeness 4. Historical cost 5.
Courtney Company reported total operating expenses of $55,000 on its adjusted trial balance for the year ended November 30, 2024. After the preliminary statements were prepared, the accountant became
Flin Flon Company enters into a contract on April 3, 2024, with Thompson Industries to supply 5,000 microprocessors at a price of $7 each, terms n/30. The microprocessors cost Flin Flon $3 each. The
Consider the following events for Byer’s Innovations Co. that occurred during 2024. 1. Leased factory space from Whole Properties Company for a one-year period starting November 1, 2024. Six
The following information is available for Juliet Hotel Supplies Ltd. regarding a recent contract with a customer: Selling price
During the 2008 and 2009 global economic crisis, several large corporations in Canada and the United States could not meet their financial commitments and filed for bankruptcy protection. Bankruptcy
EastJet Airlines reported a $1-million loss for the year ended December 31, 2019. After financial restructuring in 2022, EastJet continued to report losses, and it reported a $900,000 loss for the
Lima Company enters into a contract to sell $9,000 of merchandise, n/30. The cost of the merchandise to Lima is $4,500. Lima’s management uses the expected value method to estimate returns and has
On April 2, 2024, Pharma Company entered into a contract to supply medication to Laxall Drug Stores, FOB shipping point, terms 2/30, n/45. The selling price of the medication is $40,000 and the
Describe the four enhancing qualitative characteristics of financial information.
Abbotsford Ltd., a sports equipment wholesaler, sold $350,000 of merchandise to a customer on November 14, 2024. The merchandise was shipped on November 29, 2024, FOB shipping point and was received
Nicolet Publishers sells textbooks to universities across Canada. On July 10, 2024, Nicolet entered into a contract with Hinton University to supply 300 accounting textbooks at a price of $110 per
(a) Explain the concept of materiality. (b) How is materiality related to the qualitative characteristic of relevance.
Dusky Designs makes and sells custom jewellery and accessories to retail stores throughout Canada. On April 6, 2024, Dusky entered into a contract with Tara’s Boutique to supply 50 custom bracelets
Mullen Manufacturing Ltd. sold $450,000 of merchandise on credit to customers in the month of September. During September, the company collected $250,000 cash from its customers. The company
In the “All About You” feature, you learned about the importance of your personal resumé being a faithful representation of your personal background, education, and experience. To apply this
Describe the two fundamental qualitative characteristics of financial information.
Crittenden Cellular enters into a contract to supply Joe’s Country Corner Store with 10 smartphones at a price of $45 per phone on March 4, 2024. The phones will be delivered to Joe’s on March
Howie, Price, and Liu operate an accounting firm. In March, their staff worked a total of 1,000 hours at an average billing rate of $250 per hour. They sent bills to clients in the month of March
The following transactions took place in December 2024 for MegaMart. MegaMart uses the contract-based approach to revenue recognition and a perpetual inventory system. MegaMart estimates returns at
Junk Grrlz (Junk) is a wholesale distributor of goods. Junk purchases goods that are not selling from manufacturers and other wholesalers and sells them to discount retail outlets. You are a
Leo Legal Services enters into a written contract to provide one month of legal service to J & J Home Inspections. Leo tells J & J that he can do the work required for a fee of $5,000. At the
The following transactions took place in October 2024 for Slim’s Organic Food Store. Slim’s uses the earnings approach to revenue recognition and a perpetual inventory system. Slim’s estimates
The following selected items relate to the qualitative characteristics of useful information: 1. Comparability 2. Materiality3. Neutrality4. Timeliness5. Faithful representation6. Feedback
Santa’s Holiday Farm sells and delivers fir trees over the holiday season. All sales are cash and Santa’s Holiday Farm does not have a return policy—all sales are final. The trees sell for $50
In this group activity, you will be given a set of financial statements and a list of items that might need correcting. You will be required to (a) Decide if an adjusting journal entry is
The following are independent situations. 1. The results for the economic performance confirm Sam’s predictions about the company. 2. The manager records the cost of a new building as an
Metropolis Books sold 50,000 copies of a best-selling novel in July for $8 each. Included in each book was a $2 mail-in rebate for a future book purchase if the customer sends in proof of purchase
Victor is studying for the next accounting examination. He asks for your help on two questions: (a) What is residual value? (b) Is residual value used in determining periodic depreciation
StarLight Ltd. is authorized to issue 10,000, $4 noncumulative preferred shares. On January 13, it issued 3,000 preferred shares for $90 cash per share.(a) Prepare the journal entry to record the
On January 1, 2024, the capital balances in the A&R Partnership are as follows: Khurram Ali ................................................ $53,500 Pradjot Ramsey
Port Automotive Supply enters into a contract to supply Kelsee Electrocar Company with 300 automotive tires at a price of $40 per tire on August 4, 2024. The tires were delivered to Kelsee on
Over the winter months, Lush Lawns Co. pre-sells fertilizing and weed control lawn services to be performed from May through September, inclusive. If payment is made in full by April 1, a 5%
On October 2, 2024, Solar Supplies Ltd. entered into a contract to supply solar panels to Spade Enterprises, FOB shipping point, terms 2/20, n/30. The selling price of the solar panels is $65,000
On August 1, 2024, Pennant Uniforms Ltd. entered into a contract with Branch Health Clinic to provide 300 medical uniforms, terms 2/20, n/45, FOB shipping point. The uniforms sell for $80 each and

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