BTA 112.

Problem #1.

Partnership Formation. Barbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ripley invests $23,000 cash, and Nichols contributes $9,000 cash and equipment having a book value of $5,500. Prepare the entry to record Nicholss investment in the partnership, assuming the equipment has a fair value of $5,000.

Problem #2.

Dividing Net Income and Loss Among Partners. M. Gomez (beginning capital $60,000) and I. Inez (beginning capital $70,000) are partners. During 2022 the partnership earned net income of $85,000. Assume the partnership income-sharing agreement calls for income to be divided with a salary of $33,000 to Gomez and $22,000 to Inez, interest of 8% on beginning capital, and the remainder divided 65%35%. Prepare the schedule and journal entry to record the allocation of net income.

Problem #3

Classifications of Cash Flows Assuming a statement of cash flows is prepared, indicate the reporting of the transactions and events listed below by major categories on the statement. Use the following code letters to indicate the appropriate category under which the item would appear on the statement of cash flows. Code Cash Flows From Operating Activities Add to Net Income NCO-Add Deduct from Net Income NCO-Ded Cash Flows From Investing Activities I Cash Flows From Financing Activities F Significant Non-Cash Investing and Financing Activities Category 1. Common stock is issued for cash at an amount above par value. 2. Merchandise inventory increased during the period. 3. Depreciation expense recorded for the period. 4. Building was purchased for cash. 5. Bonds payable were acquired and retired at their carrying value. 6. Accounts payable decreased during the period. 7. Prepaid expenses decreased during the period. 8. Treasury stock was acquired for cash. 9. Land is sold for cash at an amount equal to book value. 10. Patent amortization expense recorded for a period.