Question 11 The partnerships of Up & Down and Back & Forth started in business on July 1, 2011; each partnership owns one Tetail appliance store. It was agreed as of June 30, 2014, to combine the partnerships to form a new partnership to be known as Discount Partnership. Trial balances of the two original partnerships as of June 30, 2014 follow. Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Land Buildings and Equipment Allowance for Depreciation Prepaid Expenses Accounts Payable Notes Payable Accrued Expenses Up, Capital Down, Capital Back, Capital Forth, Capital Totals Up & Down Trial Balance June 30, 2014 $25,000 90,000 $2,000 182,000 24,000 80,000 25,000 6,000 43,000 66,000 34,000 94,000 143,000 Back & Forth Trial Balance June 30, 2014 $20,000 141,000 $6,000 116,000 34,000 124,000 61,000 8,000 53,000 75,000 44,000 65,000 139,000 $443,000 $407,000 $407,000 $443,000 The following additional information is available. 1. 2. The profit- and loss-sharing ratios for the former partnerships were 40% to Up and 60% to Down; 30% to Back and 70% to Forth. The profit- and loss-sharing ratio for the new partnership will be Up, 20% Down, 30%; Back, 15%; and Forth, 35%. The opening capital ratios for the new partnership are to be the same as the profit and loss-sharing ratios for the new partnership. The capital assigned to Up & Down will total $226,000. Any cash settlements among the partners arising from capital account adjustments will be a private matter and will not be recorded on the partnership books. The partners agreed that the allowance for bad debts for the new partnership is to be 4% of the accounts receivable balances. le pr 3. The following additional information is available. 1. The profit- and loss-sharing ratios for the former partnerships were 40% to Up and 60% to Down; 30% to Back and 70% to Forth. The profit- and loss-sharing ratio for the new partnership will be Up, 20%; Down, 30%; Back, 15%; and Forth, 35%. The opening capital ratios for the new partnership are to be the same as the profit- and loss-sharing ratios for the new partnership. The capital assigned to Up & Down will total $226,000. Any cash settlements among the partners arising from capital account adjustments will be a private matter and will not be recorded on the partnership books. The partners agreed that the allowance for bad debts for the new partnership is to be 4% of the accounts receivable balances. The opening inventory of the new partnership is to be valued by the FIFO method. The inventory of Up & Down was valued by the FIFO method and the Back & Forth inventory was valued by the LIFO method. The LIFO inventory represents 80% of its FIFO value. Depreciation is to be computed by the double-declining balance method with a 10-year life for the depreciable assets. Depreciation for three years is to be accumulated in the opening balance of the Allowance for Depreciation account. Up & Down computed depreciation by the straight-line method, and Back & Forth used the double-declining balance method. All assets were obtained on July 1, 2011. After the books were closed, an unrecorded merchandise purchase of $3,000 by Back & Forth was discovered. The merchandise had been sold by June 30, 2014. 7. The accounts of Up & Down include a vacation pay accrual. It was agreed that Back & Forth should make a Similar accrual for their 10 employees, who will receive a two-week vacation of $200 per employee per week. 6. DISCOUNT PARTNERSHIP Worksheet to Adjust and Combine the Partnerships' Accounts June 30, 2014 Link Down Trial Balance June 30, 2014 Trial balance June 30, 2014 Adjusting and Question 11 The partnerships of Up & Down and Back & Forth started in business on July 1, 2011; each partnership owns one Tetail appliance store. It was agreed as of June 30, 2014, to combine the partnerships to form a new partnership to be known as Discount Partnership. Trial balances of the two original partnerships as of June 30, 2014 follow. Cash Accounts Receivable Allowance for Doubtful Accounts Merchandise Inventory Land Buildings and Equipment Allowance for Depreciation Prepaid Expenses Accounts Payable Notes Payable Accrued Expenses Up, Capital Down, Capital Back, Capital Forth, Capital Totals Up & Down Trial Balance June 30, 2014 $25,000 90,000 $2,000 182,000 24,000 80,000 25,000 6,000 43,000 66,000 34,000 94,000 143,000 Back & Forth Trial Balance June 30, 2014 $20,000 141,000 $6,000 116,000 34,000 124,000 61,000 8,000 53,000 75,000 44,000 65,000 139,000 $443,000 $407,000 $407,000 $443,000 The following additional information is available. 1. 2. The profit- and loss-sharing ratios for the former partnerships were 40% to Up and 60% to Down; 30% to Back and 70% to Forth. The profit- and loss-sharing ratio for the new partnership will be Up, 20% Down, 30%; Back, 15%; and Forth, 35%. The opening capital ratios for the new partnership are to be the same as the profit and loss-sharing ratios for the new partnership. The capital assigned to Up & Down will total $226,000. Any cash settlements among the partners arising from capital account adjustments will be a private matter and will not be recorded on the partnership books. The partners agreed that the allowance for bad debts for the new partnership is to be 4% of the accounts receivable balances. le pr 3. The following additional information is available. 1. The profit- and loss-sharing ratios for the former partnerships were 40% to Up and 60% to Down; 30% to Back and 70% to Forth. The profit- and loss-sharing ratio for the new partnership will be Up, 20%; Down, 30%; Back, 15%; and Forth, 35%. The opening capital ratios for the new partnership are to be the same as the profit- and loss-sharing ratios for the new partnership. The capital assigned to Up & Down will total $226,000. Any cash settlements among the partners arising from capital account adjustments will be a private matter and will not be recorded on the partnership books. The partners agreed that the allowance for bad debts for the new partnership is to be 4% of the accounts receivable balances. The opening inventory of the new partnership is to be valued by the FIFO method. The inventory of Up & Down was valued by the FIFO method and the Back & Forth inventory was valued by the LIFO method. The LIFO inventory represents 80% of its FIFO value. Depreciation is to be computed by the double-declining balance method with a 10-year life for the depreciable assets. Depreciation for three years is to be accumulated in the opening balance of the Allowance for Depreciation account. Up & Down computed depreciation by the straight-line method, and Back & Forth used the double-declining balance method. All assets were obtained on July 1, 2011. After the books were closed, an unrecorded merchandise purchase of $3,000 by Back & Forth was discovered. The merchandise had been sold by June 30, 2014. 7. The accounts of Up & Down include a vacation pay accrual. It was agreed that Back & Forth should make a Similar accrual for their 10 employees, who will receive a two-week vacation of $200 per employee per week. 6. DISCOUNT PARTNERSHIP Worksheet to Adjust and Combine the Partnerships' Accounts June 30, 2014 Link Down Trial Balance June 30, 2014 Trial balance June 30, 2014 Adjusting and