Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How to work these out? Use the following to answer questions 17-18: McNally and Hoffer formed a partnership on January 1, 2000, and agreed to

image text in transcribedimage text in transcribedimage text in transcribed

How to work these out?

Use the following to answer questions 17-18: McNally and Hoffer formed a partnership on January 1, 2000, and agreed to share profits 70% and 30% respectively. McNally contributed capital of $100,000. Hoffer contributed capital of $20,000 and agrees to manage the firm full time. There were no withdrawals during 2000. The partnership agreement specifies that income is to be distributed as follows: Hoffer is to be paid a salary of $2,000 per month; interest at 5% is to be paid on average capital balances during the year; Hoffer is to receive a bonus of 10%. The partnership 2000 net income is $90,000. 17. Refer to the above information. What is the amount of the Hoffer's bonus if the bonus is to be calculated on income before deducting her salary, before interest on capital accounts, and before the bonus? A) $9,000 B) $7,500 C) $6,300 D) $6,000 18. Refer to the above information. What is the amount of Hoffer's bonus if the bonus is to be calculated on income before deducting her salary, before interest on capital accounts, but after deducting the bonus? A) $ 9,000 B) $ 8,182 C) $11,500 D) $ 9,000 a b 12. Before admitting F into the partnership, D and E determined that the fair value of the partnership assets was $400,000 greater than their recorded values. Upon the admission of F, partnership assets were written up to their fair values. F then invested $100,000 of cash into the partnership for an 8 percent interest in capital and profits. Total capital of the DEF partnership amounted to $1,000,000. What was the total capital of the DE partnership before the admission of F? A) $800,000 B) $700,000 C) $720,000 D) $500,000 19. The balance sheet for the partnership of John and Mark, who share profits and losses in the ratio of 3:2, respectively, is: Cash $ 80,000 Liabilities $280,000 Other Assets 620,000 John, Capital 340,000 Mark, Capital 80,000 Total $700,000 Total $700,000 Assume that the assets and liabilities are fairly valued and the partnership decides to admit Kevin as a new partner with a 30 percent interest. No goodwill or bonus is to be recorded. How much should Kevin contribute in cash or other assets? A) $300,000 B) $210,000 C) $180,000 D) $126,000

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

Comparative International Accounting Subsequent Edition

Authors: Christopher Nobes, R. H. Parker

5th Edition

0137364636, 9780137364633

More Books

Students also viewed these Accounting questions

Question

Did you include SEC required financial data?

Answered: 1 week ago