1. Callie is admitted to the Adams & Beal Partnership under the goodwill method. Callie contributes cash of $20,000 and non-cash assets with a market value of $30,000 and book value of $15,000 in exchange for a 20% ownership interest in the new partnership. Prior to the admission of Callie, the capital of the existing partnership was $130,000 and an appraisal showed the partnership net assets were fairly stated. What will be the amount in which Adams capital account increase?

[MUST SHOW WORK]

2. The Amato, Bergin, Chelsey partnership profit allocation agreement calls for salaries of $15,000 and $30,000 for Amato & Bergin, respectively. Amato is also to receive a bonus equal to 10% of partnership income after her bonus. Interest at the rate of 10% is to be allocated to Chelsey based on his weighted average capital after draws. Any remaining profit (or loss) is to be allocated equally among the partners. Chelsey began the current year with a capital balance of $54,000 and had the following subsequent activity:

March 1	Withdraw	$20,000
July 1	Withdraw	$10,000
September 1	Contribute	$5,000
October 1	Contribute	$12,000

Required:

Assuming the partnership has income of $66,000, determine the amounts to be allocated to each partner. [MUST SHOW WORK] 25

3. Carey and Drew formed a partnership on January 1, 2008. Carey invested $100,000, Drew $70,000. Each withdrew $12,000 on each of the following dates during 2008: February 1, August 1, and November 1. These withdrawals in total were equal to salaries for the year. Interest of 8 percent was to be paid partners on the basis of their average capital balances excluding net income. Additionally, Carey was to get a 20 percent bonus based on partnership net income after the bonus, but before the salaries and interest.

Any remaining profit (or loss) was to be allocated equally among the partners.

Required: [MUST SHOW WORK]

1) If partnership net income was $150,000, how was it to be allocated between Carey and Drew?

Order of allocation: bonus, salaries, interest. Round to the nearest whole dollar.

2) Prepare the journal entry to distribute income to the partners.

4. Merz, Dechter, and Flowers are partners in a partnership and share profits and losses 40%, 40%, and 20%, respectively. The partners have agreed to liquidate the partnership and anticipate that liquidation expenses will total $14,000. Prior to the liquidation, the partnership balance sheet reflects the following book values:

Cash	$ 25,000
Noncash assets	200,000
Note payable to Dechter	12,000
Other liabilities	165,000
Capital, Merz	40,000
Capital Dechter	18,000
Capital deficit, Flowers	(10,000)

Required:

Assuming that the actual liquidation expenses are $20,000 and that noncash assets are sold for $160,000, determine how the assets will be distributed. Flowers has net personal assets of $10,000. [MUST SHOW WORK]