By Elizabeth A. Minbiole
Semesters of accounting are required by way of such a lot enterprise, economics, finance, and actuarial technological know-how courses ñ- and on typical, there are a few 700,000 scholars taking accounting every year! Are you one in all them? CliffsQuickReview Accounting rules II presents every little thing you must speedy comprehend complex accounting fundamentals ñ- from budgeting to price accounting.
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Extra resources for Accounting Principles II
Using Dee’s Consultants net income of $60,000 and a partnership agreement that says net income is shared 50%, 40%, and 10% by its partners, the portion of net income allocated to each partner is simply the $60,000 multiplied by the individual partner’s ownership percentage. Using this information, the split of net income would be: ACCOUNTING PRINCIPLES II 49 PARTNERSHIPS Dee 50% $30,000 Sue 40% 24,000 Jeanette 10% 6,000 Total net income $60,000 Using the 2:3:1 ratio, first add the numbers together to find the total shares (six in this case) and then multiply the net income by a fraction of the individual partner’s share to the total parts (2⁄6, 3⁄6, and 1 ⁄6).
The total cash paid to investors over the life of the bonds is $22,000, $10,000 of principal at maturity and $12,000 ($600 × 20 periods) in interest throughout the life of the bonds. Lighting Process, Inc. receives a premium (more cash than the principal amount) from the purchasers. The purchasers are willing to pay more for the bonds because the purchasers will receive interest payments of $600 when the market interest payment on the bonds was only $500. 4622 (2) 7,477 Price of Bond $ 11,246 (1) Present value of 1 using 5% (10% annual coupon interest rate × 6⁄ 12) and 20 periods (10-year bonds times 2 interest payments per year) from Appendix A.
The net income or loss is added to the capital accounts in the closing process. The withdrawal account is also closed to the capital account in the closing process. Asset contributions to partnerships When a partnership is formed or a partner is added and contributes assets other than cash, the partnership establishes the net realizable or fair market value for the assets. For example, if the Walking Partners company adds a partner who contributes accounts receivable and equipment from an existing business, the partnership evaluates the collectibility of the accounts receivable and records them at their net realizable value.