Assign 1 Answer Valuation of Contributions of Partners Millan 2021
Assign 1 Answer Valuation of Contributions of Partners Millan 2021
DISCUSSION
Valuation of Contribution of Partners
1. REQUIREMENT: Provide the journal entry to record partner’s contributions.
MR. SUN MS. MOON PARTNERSHIP
Cash 400,000 400,000
Accounts Receivable 200,000 200,000
Land 1,000,000 1,000,000
Equipment 150,000 150,000
TOTAL 600,000 1,150,000 1,750,000
Mortgage Payable- Land (250,000) (250,000)
ADJUSTED CAPITAL 600,000 900,000 1,500,000
BALANCE
JOURNAL ENTRY:
DEBIT CREDIT
Cash 400,000
Accounts Receivable 200,000
Land 1,000,000
Equipment 150,000
Mortgage Payable 250,000
Mr. Sun, Capital 600,000
Ms. Moon, Capital 900,000
2. REQUIREMENT: Which partner should make an additional contribution and by how much?
JOURNAL ENTRY:
DEBIT CREDIT
Cash 400,000
Accounts Receivable 200,000
Land 1,000,000
Equipment 150,000
Mortgage Payable 250,000 Variation to Bonus
Mr. Sun, Capital 750,000 Method- cash settlement
Ms. Moon, Capital 750,000 between partners
4. REQUIREMENTS:
A. Provide the compound journal entry to record the partner’s contributions.
B. Provide the simple journal entries to record the partner’s contributions.
Mr. Sun pays Ms. Moon 150,000. This is not recorded in the partnership books
DEBIT CREDIT
Cash 400,000
Accounts Receivable 200,000
Land 1,000,000
Equipment 150,000
Mortgage Payable 250,000
Mr. Sun, Capital 750,000
Ms. Moon, Capital 750,000
B. SIMPLE JOURNAL ENTRY
Mr. Sun Contributions:
DEBIT CREDIT
Cash 400,000
Accounts Receivable 200,000
Mr. Sun, Capital 600,000
DEBIT CREDIT
Land 1,000,000
Equipment 150,000
Mortgage Payable 250,000
Ms. Moon, Capital 900,000
ANSWER: Mr. Sun should invest an additional of 150,000, while Ms. Moon shall withdraw 150,000.