# Application of Acc

 Application Assignment #4 Income Sharing Among Partners, Admission of a Partner Problem #1 Moe, Larry, and Curly makeup the MLC partnership. During 2015 they had Revenue of \$250,000 and Expenses of \$100,000. M, Cap \$100,000; L Cap \$150,000; C Cap \$500,000. The partnership agreement states that Interest is 10% of their Capital Accounts and any remaining amount is split equally. Distribute the profits for 2015 under the terms below. Also Record the Appropriate Closing Journal Entry .

 Problem #2 Partners Washington, Lincoln & Wilson are partners. Their Equity Accounts are \$100,000, \$500,000 and \$750,000. Salaries are allocated at \$50,000, \$75,000 & \$100,000. Interest is allocated on Investments at 10%.  Distribute \$390,000 in after tax net income AND record the appropriate Journal Entry.

 Problem #3 This is based upon the same information as Problem #2. Distribute \$300,000 in after tax net income and record the appropriate Journal Entry.

 Problem #4 This problem has a profit distribution that exceeds the amount of the profit. Need a hint? Continue with the required distribution namely salary and interest. This will result in a negative amount. Split the negative amount among the partners. For example…let’s say 2 partners have net income of \$50,000 to split between them but the required distribution for salary and interest is \$60,000. That means that NEGATIVE -\$10,000 has to split between them. This means they will have negative -\$5,000 each in the distribution. Calculate the distribution based upon the following and of course record the appropriate journal entry. Partner A – Capital, \$100,000, 10% Interest, Salary \$50,000 Partner B – Capital, \$200,000, 10% Interest, Salary \$75,000 Net Profit = \$135,000

 Problem #5 Sharing Profits and Journalizing Cosmo and Ellis are Partners with Capital Accounts of \$50,000 and \$75,000. They agree to share profits by receiving Salaries of \$55,000 and \$45,000. Interest on Investment is 10% with any excess or deficit being split equally. Case A: Net Income Amounts to \$165,000  Case B: Net Income = \$100,500 Figure the distribution for both cases about and do the journal entries.

 Problem #6 Admission of a Partner Partners A, B and C have Capital accounts for \$200,000, \$300,000 and \$500,000.  (Below are 3 separate case possibilities.) Case A  A New Partner  (D) buys partner’s B equity for \$375,000. Record the journal entry. Case B Partner D invests \$500,000 into the partnership for 10% equity. Record the journal entry. Assume Transaction Case A did NOT happen. Case C Partner D invests \$100,000 for 20% equity in the partnership. Record the journal entry. Assume Cases A & B did NOT happen.

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