Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ership LP , a limited partnership, was formed on January 1 , Year 2 . Individuals Thomas Green and Judith Smith each Fasta Partnership LP

ership LP, a limited partnership, was formed on January 1, Year 2. Individuals Thomas Green and Judith Smith each Fasta Partnership LP, a limited partnership, was formed on January 1, Year 2. Individuals Thomas Green and Judith Smith each
contributed cash for an interest in the partnership. Fasta operates a clothing manufacturing business and has a calendar year end.
Green, the general partner, has a 60 percent ownership interest and actively participates in the management of the business on a
daily basis. Green bears the economic risk of loss relating to all of Fasta's outstanding liabilities, except for Fasta's loan payable to
Smith.
Smith, the limited partner, has a 40 percent ownership interest and does not actively participate in the operations of the partnership
Smith is not obligated to restore any negative capital accounts upon liquidation of the partnership.
A letter from Green and a copy of Fasta's adjusted tax trial balance for the year ended December 31, Year 3, can be found in the
exhibits.
For each item requested below, enter the applicable amount in the appropriate cell as a positive, whole value. If a response is zero,
enter a zero (0)
cash for an interest in the partnership. Fasta operates a clothing manufacturing business and has a calendar year end.
feneral partner, has a 60 percent ownership interest and actively participates in the management of the business on a
Green bears the economic risk of loss relating to all of Fasta's outstanding liabilities, except for Fasta's loan payable to
mited partner, has a 40 percent ownership interest and does not actively participate in the operations of the partnership.
obligated to restore any negative capital accounts upon liquidation of the partnership.
Green and a copy of Fasta's adjusted tax trial balance for the year ended December 31, Year 3, can be found in the
m requested below, enter the applicable amount in the appropriate cell as a positive, whole value. If a response is zero,
(0).
Client Letter
Fasta Partnership LP
923 Silver Way
Pedricktown, WY 82600
January 15, Year 4
Dear CPA:
Enclosed is a copy of our tax basis trial balance as of December 31, Year 3. All booktax differences
have been properly reflected.
The following information relates to transactions that occurred during Year 3
On December 31, Year 3, Judith Smith loaned Fasta $15,000. Interest on the loan is calculated at
a market rate.
On July 1, Year 3, Fagqa borrowed $50,000 from Midland Banktc purchase equipment. The loan
has a 10-year term, and interest is calculated at a market rate Payments are due monthly and
began on September 1, Year 3. Based on the loan documents, this is a recourse liability.
Depreciation expense has been calculated using MACRS. In addition, Fasta decided not to elect a
Section 179 deduction for Year 3.
Interest income of $1,000 was received on Fasta's saving account throughout the year.
Please contact me if you have any questions regarding the trial balance.
Sincerely,
Thomas Green
Thomas Green
Fasta Partnership LP
General Partner
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Financial Accounting

Authors: Carl S. Warren, James M. Reeve

9th Edition

0324381921, 978-0324381924

More Books

Students also viewed these Accounting questions

Question

5. Explain how to conduct an appraisal feedback interview.

Answered: 1 week ago

Question

2. Answer the question, Who should do the appraising?

Answered: 1 week ago