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Natasha2012 [34]
2 years ago
15

Admitting New Partner With Bonus Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and

Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $78,000 and $46,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $32,000.
Required:
a. Determine the recipient and amount of the partner bonus.
b. Provide the journal entry to admit Solano into the partnership.
c. Why would a bonus be paid in this situation?
Business
1 answer:
Law Incorporation [45]2 years ago
8 0

Answer:

a)

Cody Jenkins, capital $78,000

Lacey Tanner, capital $46,000

Solano’s contribution $32,000

Total partners’ capital after admitting Solano $156,000

Solano’s equity interest after admission $156,000 x 30% = $46,800

Bonus paid to Solano $46,800 - $32,000 = $14,800

b)

Dr Cash 32,000

Dr Cody Jenkins, capital 7,400

Dr Lacey Tanner, capital 7,400

    Cr Valeria Solano, capital 46,800

c) Probably Solano's expertise is required by Cody and Tracy. Her contribution will help the partnership grow or earn higher profits.

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Green Caterpillar Garden Supplies Inc.'s income statement reports data for its first year of operation. The firm's CEO would lik
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Answer:

Green Caterpillar Garden Supplies Inc.

a) Income Statement for Year Ending December 31

                                                              Year 1              Year 2 (Forecasted)

Net sales                                              $30,000,000       $37,500,000

Less: Operating costs                            19,500,000          24,375,000

Depreciation &amortization expenses    1,200,000            1,200,000

Operating income (or EBIT)                  $9,300,000         $11,925,000

Less: Interest expense                              930,000              1,788,750

Pre-tax income (or EBT)                          8,370,000            10,136,250

Less: Taxes (40%)                                   3,348,000             4,054,500

Earnings after taxes                            $5,022,000            $6,081,750

Less: Preferred stock dividends               100,000                 100,000

Earnings to common shareholders      4,922,000              5,981,750

Less: Common stock dividends           2,008,800              2,432,700

Contribution to retained earnings      $2,913,200           $3,549,050

b) In Year 2, if Green Caterpillar has 5,000 shares of preferred stocks issued and outstanding, then each preferred share should expect to receive _ $20 _ in annual dividends.

-If Green Caterpillars has 400,000 shares of common stock issued and outstanding, then the firm's earnings per share (EPS) is expected to change from _ $12.31 _ in Year 1 to _ $14.95 _ in Year 2.

-Green Caterpillar's before interest, taxes, depreciation and amortization (EBITDA) value changed from _ $10,500,000 _ in Year 1 to _ $13,125,000_ in Year 2.

-It is _ wrong _ to say that Green Caterpillar's net inflows and outflows of cash at the end of Years 1 and 2 are equal to the company's annual contribution to retained earnings, $2,913,200 and $3,549,050, respectively. This is because _ not all_ of the items reported in the income statement involve payments and receipts of cash.

Explanation:

a) The preferred dividend per share = Preferred Dividends divided the number of preferred stock shares.

b) The EPS is the Earnings Per Share and is calculated as Net Income to Common Stockholders divided by the number of common stock shares outstanding.

The operating cost figure may not be based on a cash basis.  It could be accrued costs.  Similarly, the net sales may as well involve sales on credit, which do not involve cash flows.

8 0
3 years ago
What is the largest category calculated when using the expenditure approach to calculate GDP?
Leya [2.2K]
When using the expenditure approach, we are looking at the total spending of a business that is included in the equation to compute for GDP. For this, I would say government purchases is the answer because government purchases would take up the biggest chunk of a country's revenue for development and imports.  
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3 years ago
One of the authors wanted to determine the effect of changing answers on​ multiple-choice tests. she studied the tests given by
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Which of the statements below is​ TRUE?A.Accounting Identity​ is: Assets equivalentLiabilities minus​Owners' Equity.B.Accounting
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Answer:

C.Accounting Identity​ is: Assets equivalentLiabilities​ + Owners' Equity.

Explanation:

In accounting identity all variables must balance, if they do not balance according to the equation then there must be an error in formulation, measurement or calculation.

The basic assumption in accounting identity is that the balance sheet must balance. That is assets must be equal to a sum of liabilities and owner's equity.

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Answer:

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Explanation:

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An invasion of privacy is considered to be a tort.

The four most common types of invasion of privacy torts are:

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The display of the checks of customers is a public disclosure of private fact of the customers, therefore, it is AN INVASION OF PRIVACY.

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