Accounting 404-01 Fall 2017- TestI 1. R, S and T form a partnership and agree to allocate income in the ratio of 5:2:3, after recognition of 10% interest on beginning capital balances and a salary of $20,000 to R and $30,000 to T. Capital balances on January 1 were: 30,000 $40,000 $50,000 Calculate the net income (loss) allocated to each partner under each of the following independent cases: a. net income is $180,000 b. net income is 38,000 c. net loss is 10,000 BONUS 5 points. In case c, what is R's capital balance at year end? R, S and T wish to expand their business. They feel the need to admit a new partner, M. The following balance sheet is for the partnership prior to the admission of 2. M. cash other assets 800,000 $400,000 liabilities Reap (50%) s cap (20%) T cap (30%) $300,000 400,000 300,000 200,000 Prepare the necessary journal entries to record the admission of M in each of these independent cases: A. M is to invest sufficient cash to receive one fourth of the business. No bonus. No B. M is to invest $500,000 for a one fourth of the business. Use the goodwill method. C. M is to invest $500,000 for a one fourth interest. Use the bonus method. D. M is to invest $200,000 for a 40% interest in the business. Use the bonus 3. A, B and C share profits and losses in the ratio of 5:3:2, with respective capital balances goodwill. method. of $100,000, $200,000 and $300,000. A is withdrawing from the partnership and will receive S120,000. give the Same as above, using the bonus methood. 70,000. give the entry for his withdrawal using the goodwill method. Same as C. using the bonus method. entry for his withdrawal using the goodwill method