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Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
Accounting for partnership
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Accounting for partnership

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  • 1. Loading ....
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  • 3.  Fauzi Ilmi Arifin Bazari Azhar Azizi Dian Paisal Putra Eko Kurniadi Next
  • 4.  Partnership Form of Organization Basic Partnership Accounting • Characteristic • Organizations with partnership • Advantages/disadvantages • Partnership agreement • Forming a partnership • Dividing net income/loss • Financial statements
  • 5. Partnership Form of Organization   A partnership is an association of two or more persons to carry on as co-owners of a business for profit.  Type of Business: Small retail, service, or manufacturing companies. Accountants, lawyers, and doctors. Back
  • 6. Association of Individuals CoOwnership of Property Unlimited Liability Back Mutual Agency Characteristic of Partnership Limited Life
  • 7. Association of Individuals  The voluntary association of two or more individuals in a partnership may be based on as simple an act as a handshake It is preferable to state the agreement in writing, so a partnership is a legal entity for certain purpose A partnership also is an accounting entity for financial reporting purposes, the personal assets is excluded from accounting records for partnership The net income of a partnership is not taxed as a separate entity Back
  • 8. Mutual Agency each partner acts on  Mutual Agency means that behalf of the partnership when engaging in partnership business.  Act of any partner is binding on all other partners, so long as the act appears to be appropriate for the partnership. Back
  • 9. Limited Life   It may be ended voluntarily at any time  Dissolution occurs whenever a partner withdraws or a new partner is admitted  Dissolution does not mean the business ends Back
  • 10. Co-Ownership of Property   Each partner has a claim on total assets  This claim does not attach to specific assets  All net income or net loss is shared equally by the partners, unless otherwise stated in the partnership agreement Back
  • 11. Unlimited Liability   Each partner is personally and individually liable for all partnership liabilities.  Each partner is responsible for all the debts of the partnership  Each partner is said to have unlimited liability Back
  • 12. ORGANIZATIONS WITH PARTNERSHIP CHARACTERISTICS
  • 13. Regular Partnership   Major Advantages  Simple and inexpensive to create and operate.  Major Disadvantages  Owners (partners) personally liable for business debts. Back
  • 14. Limited Partnership (Ltd. Or LP)  Major Advantages Limited partners have limited personal liability for business debts as long as they do not participate in management. General partners can raise cash without involving outside investors in management of business. Back   Major Disadvantages General partners personally liable for business debts. More expensive to create than regular partnership. Suitable for companies that invest in real estate.
  • 15. Limited Liability Partnership (LLP)  Major Advantages Mostly of interest to partners in old-line professions such as law, medicine, and accounting. Owners (partners) are not personally liable for the malpractice of other partners. Back   Major Disadvantages Unlike a limited liability company, partners remain personally liable for many types of obligations owed to business creditors, lenders, and landlords. Often limited to a short list of professions..
  • 16. Limited Liability Company (LLC)  Major Advantages Owners have limited personal liability for business debts even if they participate in management. Back   Major Disadvantages More expensive to create than regular partnership.
  • 17. Advantages for Partnership are:  Disadvantages for Partnership are: Combining skill and resources of two or more individual Mutual agency Ease of formation Limited life Freedom from governmental regulations and restrictions Unlimited liability Ease of decision making Back
  • 18. Partnership Agreement  The Partnership Agreement or Articles of Co-partnership: 1. Names and capital contributions of partners 2. Rights and duties of partners 3. Basis for sharing net income or net loss 4. Provision for withdrawals of assets 5. Procedures for submitting disputes to arbitration 6. Procedures for the withdrawal or addition of a partner 7. Rights and duties of surviving partners in the event of a partner’s death Back
  • 19. Basic Partnership Accounting  Forming a Partnership Dividing net income/loss Financial statements Back
  • 20. Forming a Partnership   Partner’s initial investment should be recorded at the fair market value of the assets at the date of their transfer to the partnership.  E12-2 Fauzi, Ical, and Eko are forming a partnership. Fauzi is transferring $50,000 of cash to the partnership. Ical is transferring land worth $15,000 and a small building worth $80,000. Eko transfers cash of $9,000, accounts receivable of $32,000 and equipment worth $19,000. The partnership expects to collect $29,000 of the accounts receivable.  Instructions: Prepare the journal entries to record each of the partners’ investments. Back
  • 21. Forming a Partnership  E12-2 Fauzi is transferring $50,000 of cash to the partnership. Prepare the entry. Cash 50,000 Fauzi, Capital 50,000 Ical is transferring land worth $15,000 and a small building worth $80,000. Prepare the entry. Land 15,000 Building 80,000 Ical, Capital Back 95,000
  • 22. Forming a Partnership  E12-2 Eko transfers cash of $9,000, accounts receivable of $32,000 and equipment worth $19,000. The partnership expects to collect $29,000 of the accounts receivable. Prepare the entry. Cash Accounts receivable Equipment Back Allowance for doubtful accounts Eko, Capital 9,000 32,000 19,000 3,000 57,000
  • 23. Dividing Net Income or Net Loss Partners equally share net income or net loss unless the partnership contract indicates otherwise. Closing Entries:  Close all Revenue and Expense accounts to Income Summary. Close Income Summary to each partner’s Capital account for his or her share of net income or loss. Close each partners Drawing account to his or her respective Capital account. Back
  • 24. Dividing Net Income or Net Loss Income Ratios  Partnership agreement should specify the basis for sharing net income or net loss. Typical income ratios: Fixed ratio. Ratio based on capital balances. Salaries to partners and remainder on a fixed ratio. Interest on partners’ capital balances and the remainder on a fixed ratio. Salaries to partners, interest on partners’ capital, and the remainder on a fixed ratio. Back
  • 25. Dividing Net Income or Net Loss  Exercise F. Astaire and G. Rogers have capital balances on January 1 of $50,000 and $40,000, respectively. The partnership income-sharing agreement provides for (1) annual salaries of $20,000 for Astaire and $12,000 for Rogers, (2) interest at 10% on beginning capital balances, and (3) remaining income or loss to be shared 60% by Astaire and 40% by Rogers. Instructions (a) Prepare a schedule showing the distribution of net income, assuming net income is (1) $55,000 and (2) $30,000. (b) Journalize the allocation of net income in each of the situations above. Back
  • 26. Dividing Net Income or Net Loss Exercise Prepare a schedule showing the distribution of net income, assuming net income is (1) $55,000 and (2) $30,000.  Back
  • 27. Dividing Net Income or Net Loss Exercise Prepare a schedule showing the distribution of net income, assuming net income is (1) $55,000 and (2) $30,000.  Back
  • 28. Dividing Net Income or Net Loss Exercise Journalize the allocation of net income in each of the situations above.  (1) (2) Income summary F. Astaire, Capital G. Rogers, Capital 55,000 Income summary F. Astaire, Capital 30,000 G. Rogers, Capital Back 33,400 21,600 18,400 11,600
  • 29. Partnership Financial Statements  The income statement for a partnership is identical to the income statement for a proprietorship, except for the Back division of net income.
  • 30. Partnership Financial Statements  Back
  • 31. Thank You Syukron Katsiron Terima Kasih Arigatou Gozaimasu Danke Merci Matur Nuhun

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