ACCOUNTING FOR THE PARTNERSHIP
Problem 2.2
Solution
Partner’s capital accounts
| Details | Gee | Hawe | Ivan | Details | Gee | Hawe | Ivan |
| Salaries | 10,000 | 15,000 | 20,000 | Bal b/d | 200,000 | 100,000 | 120,000 |
| Liabilities | 80,000 | 120,000 | – | Gain on revaluation | 120,000 | 80,000 | – |
| Bonus | 2,520 | 2,520 | 7,800 | ||||
| Income | 6,048 | 8,004 | 6,048 |
Computation of Bonus
Net income = 78,000 – (10,000+15,000+20,000) = 33,000
Bonus to Ivan = 10%* 78,000 = 7,800
Bonus to Gee and Hawe = 33,000 – 7,800 = 25,200
Hawe = 10% * 25,200 = 2,520
Gee = 10% * 25,200 = 2,250
Remaining income = 25,200 – (2,520 + 2,520) = 20,160
Gee = 30%* 20,160 = 6,048
Hawe = 40% * 20,160 = 8,064
Ivan = 30% * 20,160 = 6,048
Gain of revaluation = 300,000 * 40% = 120,000 Gee
300,000 * 60% = 180,000 Hawe
| Details | Dr | Cr |
| Capital a/c
Revaluation To record gains on revaluation |
300,000 |
300,000 |
| Salaries a/c
Capital a/c To record salaries |
45,000 |
45,000 |
| Bonus a/c
Capital a/c To record bonus |
12,840 |
12,840 |
| Income statement a/c
Capital a/c To record income shared |
20,160 |
20,160 |
| Capital a/c
Liabilities a/c To record liabilities taken by partnership |
200,000 |
200,000 |
Problem 3.7
Solution
Journal Entries
| Details | Dr | Cr |
| Realization a/c
Marketable equity security a/c To record withdrawals of marketable securities |
44,000 |
44,000 |
| Realization a/c
Other assets a/c To record transfer of other assets to realization account |
180,000 |
180,000 |
| Bank a/c
Realization a/c To record proceeds of sales of other assets |
200,000 |
200,000 |
| Realization a/c
12% bond a/c To record transfer of 12% bond to realization a/c |
40,000 |
40,000 |
| Cash a/c
Realization a/c To record proceeds of sales of 12% bond |
35,600 |
35,600 |
| Haye capital a/c
Realization a/c To record loss shared to Haye |
3,300 |
3,300 |
| Lee capital a/c
Realization a/c To record loss to Lee |
1,100 |
1,100 |
| Liability a/c
Bank a/c To record liabilities paid |
27,000 |
27,000 |
| Realization a/c
12% bond a/c To record withdrawal of 12% bond by Haye and Lee |
160,000 |
160,000 |
| Haye capital a/c
Cash a/c – To record cash shared |
6,667 |
6,667 |
| Lee capital a/c
Cash a/c To record cash shared |
3,333 |
3,333 |
Reference
Singal R.S. and Mittal R.K. (2003). Financial Accounting – FK Publication, India
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